CAN I CLAIM GST/QST ON ALL MY BUSINESS PURCHASES?

Many Quebec business owners assume that every business-related purchase automatically qualifies for GST/QST input tax credits (ITCs for GST and ITRs for QST). Unfortunately, this is not the case. Some expenses are fully eligible, others partially eligible, and some not eligible at all. Even eligible expenses can be denied if documentation is incomplete or if a purchase is not directly linked to commercial activity. This guide explains which business purchases qualify for GST/QST credits — and which do not — so you can file accurately, maximize credits, and avoid audit issues.

Understanding eligibility rules protects your business from costly reassessments and ensures you claim the credits you’re legally entitled to.

LEGAL AND REGULATORY FRAMEWORK

Under the Excise Tax Act (GST) and the Quebec Taxation Act (QST), a business may claim GST/QST credits only when:

• the purchase is for commercial activity
• the expense is reasonable for the business
• the business is registered for GST/QST
• the supplier charged GST/QST correctly
• the invoice includes all required tax information
• the tax was actually paid or payable

Personal or exempt activities do not generate ITCs/ITRs.

KEY COURT DECISIONS

Courts have repeatedly denied GST/QST credits where:

• invoices lacked supplier tax numbers
• expenses included personal components
• documentation was illegible or incomplete
• taxpayers failed to prove the business purpose
• purchases related to exempt, not taxable, activities

Judges stress that documentation and eligibility must be clear and provable.

WHY REVENU QUÉBEC REVIEWS BUSINESS PURCHASES CLOSELY

Revenu Québec frequently reviews ITC/ITR claims because:

• many businesses overclaim credits
• startups often mix personal and business purchases
• online sellers forget to download invoices
• subcontractor invoices are incomplete
• recurring digital subscriptions lack proper tax details
• refund claims appear excessive for the revenue reported

Businesses claiming large or unusual credits may face verification before refunds are released.

CAN YOU CLAIM GST/QST ON ALL BUSINESS PURCHASES?

Below is a clear guide to what you can and cannot claim.

FULLY ELIGIBLE PURCHASES (IF DOCUMENTED PROPERLY)

You can generally claim GST/QST on:

• office supplies
• computer equipment
• software and online tools
• rent (if taxes apply)
• utilities and phone bills
• subcontractor invoices
• raw materials and inventory
• advertising and marketing
• business insurance
• shipping and courier services
• professional fees
• business-related equipment
• commercial tools
• repairs and maintenance

These expenses are straightforward IF documentation is complete.

PARTIALLY ELIGIBLE PURCHASES (REQUIRES ALLOCATION)

Some purchases are eligible only in proportion to business use:

• vehicle expenses (fuel, repairs, maintenance)
• home office expenses
• shared-use internet or cellphone plans
• meals (usually 50% eligible)
• travel partly used for personal purposes
• mixed-use equipment

Proper allocation is essential to avoid overclaiming.

NOT ELIGIBLE FOR GST/QST CLAIMS

You cannot claim credits on:

• personal expenses
• expenses not linked to commercial activity
• exempt activities (e.g., certain health, education, finance)
• purchases where tax was not charged
• items purchased from unregistered suppliers
• fines, penalties, interest
• club memberships
• life or health insurance premiums
• vehicle purchases with restricted ITC rules (for certain corporations)

Claiming ineligible purchases often triggers audits or adjustments.

DOCUMENTATION REQUIRED FOR CLAIMING GST/QST

To be eligible, invoices must include:

• supplier name and address
• GST/QST numbers
• invoice number and date
• itemized description
• GST and QST amounts separately listed
• total amount paid

Bank statements alone are not valid proof.

HOW TO ENSURE YOU CLAIM CREDITS CORRECTLY

Follow these steps:

1. Register for GST/QST before claiming any credits.

2. Use accounting software with proper tax codes.

3. Collect and store all receipts (digital accepted).

4. Separate personal and business expenses.

5. Allocate mixed-use expenses accurately.

6. Confirm suppliers are GST/QST registered.

7. Review recurring charges monthly.

8. Reconcile ITCs and ITRs before filing.

9. Prepare an audit-ready folder for each filing period.

MACKISEN STRATEGY

Mackisen CPA helps businesses determine which expenses are eligible for GST/QST credits and ensures documentation is complete. We review your receipts, allocate mixed-use expenses properly, correct bookkeeping errors, and prepare audit-ready ITC/ITR schedules. Our team helps maximize credits while ensuring full compliance with Quebec rules.

REAL CLIENT EXPERIENCE

A freelancer lost hundreds in ITCs due to missing supplier tax numbers. Mackisen contacted vendors and recovered full documentation.

A construction company overclaimed vehicle expenses. Mackisen applied proper allocation and prevented reassessment.

An online retailer missed thousands in ITCs on digital subscriptions. Mackisen built a digital receipt capture system.

COMMON QUESTIONS

Can I claim GST/QST on fuel?
Yes — but only the business-use percentage.

Do I need original receipts?
Digital copies are acceptable if complete and legible.

Can I claim GST/QST on meals?
Yes — typically 50%.

Can I claim credits on home office expenses?
Yes, if properly allocated.

Can I claim GST/QST on tools?
Yes, if purchased for business use and supported by invoices.

WHY MACKISEN

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses claim GST/QST correctly and maximize credits while staying compliant. Our structured systems prevent overclaims, protect you from audits, and recover money left on the table.