Claiming Input Tax Credits (GST/HST)
You can claim input tax credits for general business operating expenses. These are expenses you incur on day to day basis like office supplies, maintenance and repairs, telephone or utilities.
If the general expenses are used 90% of the time for your business revenue then you claim 100 % of the credit on GST you paid.
If the expenses used are 10% or less, you cannot claim any input tax credits. If the ratio of expenses is in between 10% and 100%, you can prorate the input tax credits claim.
For example if you buy external drives for storage of your data and the data you are saving is 100% business data, you can claim 100% input tax credits. However, if you use the external drives to save part of your business data, you will be able to claim on the portion of input tax credits that relate to your business portion.
If you are buying external drives to store your personal data, computer games or movies, you cannot claim any portion of the input tax credit.
Some people have two types of businesses. The one type that is subject to HST and the other type is providing exempt services. If you buy external drive to store data for both the businesses, as a general rule of thumb, you will be able to claim 50% of the input tax credits. It is because you are using 50% of the drive for one business and the other 50% of the drive for other business that supplies exempt services.
We can help you with your GST/HST filings and obtaining GST/HST rulings and interpretations.
Mansoor Suhail (Mani)
Accountant
MS TAX – BSBA – EA – ICIA – RA
1804 – 1360 York Mills Road
North York, ON, M3A 2A3
TAX for CANADA AND U.S.A
Web: www.theaccountingandtax.com
Email: taxservicesguru@gmail.com
416 – 283 – 8774
