INPUT TAX CREDIT CHECKLIST: DON’T MISS THESE GST/QST DEDUCTIONS

Input tax credits (ITCs for GST and ITRs for QST) allow businesses to recover the sales tax they pay on eligible business purchases. Missing out on these credits means leaving money on the table and overstating your tax payable. Many Quebec businesses fail to claim all eligible ITCs simply because they lack documentation, misplace receipts, or misunderstand which expenses qualify. This guide provides a complete input tax credit checklist to ensure you capture every eligible deduction and stay fully compliant during a Revenue Québec audit.

For small businesses, consultants, contractors, and retailers, input tax credits significantly reduce cash flow pressure. Ensuring you claim all eligible credits improves profitability and prevents unnecessary tax payments.

LEGAL AND REGULATORY FRAMEWORK

Input tax credits fall under the Excise Tax Act (for GST) and the Quebec Taxation Act (for QST). To claim ITCs/ITRs, expenses must be:
• incurred to make taxable or zero-rated supplies
• reasonable in relation to the business activity
• supported by a valid invoice showing GST/QST amounts
• incurred after your GST/QST registration date
• not personal or exempt in nature

Certain industries face special rules, such as financial institutions, charities, and exempt sectors. Businesses must keep records for at least six years and must only claim ITCs when proper documentation exists.

KEY COURT DECISIONS

Courts consistently rule that businesses cannot claim ITCs without proper documentation. In several cases, taxpayers argued that expenses were legitimate but lacked invoices showing supplier GST/QST numbers. Judges denied the credits because the documentation did not meet legal requirements. Courts also rejected claims for expenses that were partially personal or unrelated to commercial activity.

In refund-related disputes, courts upheld Revenu Québec’s right to deny ITCs until full evidence was provided. These decisions highlight the importance of complete, compliant invoicing.

WHY CRA AND REVENU QUÉBEC TARGET ITC CLAIMS

Input tax credits are frequently reviewed because they are one of the most error-prone sections of GST/QST returns. Red flags for auditors include:
• large or unusual ITC claims
• refund periods with high expenses
• missing or incomplete invoices
• expenses from unregistered suppliers
• personal or mixed-use purchases
• misclassified capital expenditures

When documentation is missing or suspicious, Revenu Québec often withholds refunds until the business proves its ITC claims.

INPUT TAX CREDIT CHECKLIST: DON’T MISS THESE GST/QST DEDUCTIONS

Use this checklist to ensure you claim every eligible credit and avoid claiming ineligible ones.

1. Ensure every invoice contains required legal details
   A valid GST/QST invoice must include:
   • supplier name and address
   • supplier GST and QST registration numbers
   • invoice date and number
   • clear description of goods or services
   • GST and QST amounts separately displayed
   • total amount payable

2. Verify supplier registration numbers
   Confirm that suppliers charging you GST/QST have valid registration numbers. ITCs can be denied if the supplier is not properly registered.

3. Track all business-related expenses
   Common eligible categories include:
   • office supplies
   • software subscriptions
   • advertising and marketing
   • professional fees
   • telecommunications
   • utilities
   • small tools and equipment
   • rent (if GST/QST applies)

4. Separate personal and business expenses
   Only the business portion qualifies. Mixed-use expenses require allocation. Personal expenses must never be claimed.

5. Capture digital receipts and invoices
   Online platforms, e-commerce vendors, and SaaS providers often issue digital receipts. Save them systematically each month.

6. Review recurring charges
   Monthly subscriptions, phone bills, and utilities often have recoverable GST/QST. Ensure none are overlooked.

7. Check contractor and subcontractor invoices
   Ensure they include proper tax breakdowns, especially in construction, consulting, or service sectors.

8. Identify capital expenses
   Capital assets such as equipment, computers, machinery, leasehold improvements, and vehicles may qualify for ITCs. Documentation is critical.

9. Track vehicle expenses carefully
   Only the business-use percentage of vehicle expenses qualifies, and documentation must support the allocation.

10. Include small receipts
    Small purchases like supplies, fuel, parking, or client refreshments add up. Keep all receipts.

11. Review travel and meal expenses
    Only eligible portions of travel and meals qualify, and detailed documentation is required.

12. Capture expenses paid personally but used for business
    Owner-paid expenses can qualify, but they must be reimbursed through the business with full documentation.

13. Ensure expenses occurred after GST/QST registration
    Pre-registration expenses generally do not qualify unless special rules apply and documentation proves they were for commercial activities.

14. Avoid claiming expenses without tax
    If an invoice does not include GST/QST, you cannot claim ITCs/ITRs.

15. Maintain monthly ITC summaries
    A monthly spreadsheet or accounting report prevents missing credits at filing time.

MACKISEN STRATEGY

Mackisen CPA assists businesses in maximizing their input tax credits while staying compliant. We review supplier invoices, verify documentation, classify expenses, and build organized ITC/ITR tracking systems. Our compliance reviews identify missing credits and correct misclassifications before filing. We also prepare amended returns when businesses discover unclaimed ITCs from prior periods.

For businesses facing refund verification or audit, Mackisen creates complete ITC documentation packages showing each expense, supplier registration details, and proof of payment.

REAL CLIENT EXPERIENCE

A Montreal technology startup lost thousands in unclaimed ITCs because they failed to save digital invoices for software tools. Mackisen reconstructed their records and successfully recovered credits through amended filings.

A contractor claimed personal vehicle expenses as business ITCs. Revenu Québec challenged the claim. Mackisen created a proper usage allocation method and salvaged part of the credits.

A wellness business submitted a refund claim with incomplete receipts. The refund was delayed. Mackisen rebuilt the documentation, submitted a complete file, and had the refund approved.

COMMON QUESTIONS

Can I claim ITCs without receipts
No. Proper documentation is mandatory under Quebec and federal law.

Can ITCs be claimed retroactively
Yes, within the time limits. A CPA can help file adjustments for missed credits.

Are meals and entertainment eligible
Partially, depending on the situation. Documentation must be detailed.

Do pre-registration expenses qualify
Only in limited situations. Documentation and timing are key.

Can personal purchases ever qualify
Only the business-use portion, properly allocated and documented.

WHY MACKISEN

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses maximize input tax credits while staying fully compliant with GST/QST rules. Our expert team ensures your credits are well-documented, correctly classified, and audit-proof.