On a construction job, tax is hiding in every line: the GST and QST on lumber, drywall, a rented lift, a tank of diesel, a subcontractor’s invoice. If you’re registered for GST/QST, most of that tax isn’t a cost — it’s refundable. The contractors who leave money on the table are the ones whose records can’t support the claim.
What an input tax credit is
When you’re registered, you charge GST/QST on what you bill, and you claim back the GST/QST you paid on your inputs — the input tax credit (ITC) for GST and the input tax refund (ITR) for QST. You remit the difference. The credit is available only to the extent your purchases are used in your commercial activity; something used partly for personal purposes is claimable only for the business portion.
What a contractor can usually claim
- Materials and supplies — lumber, concrete, fixtures, consumables.
- Small tools and equipment, and equipment rentals.
- Subcontractor invoices that charge you GST/QST.
- Fuel and vehicle operating costs, to the extent of business use.
- Professional and overhead costs used in the business.
Passenger vehicles and other capital property have their own rules, so treat those separately.
The documents decide it
An ITC is only as good as the record behind it. You need a valid invoice or receipt, and the detail required scales with the amount — a small receipt needs less, a larger invoice needs more, including your business name and, critically, the supplier’s GST/QST registration number. If a supplier can’t give you a registration number, you generally can’t claim the tax — so it’s worth confirming a number you’re unsure about (the CRA and Revenu Québec both let you verify one). This is also why cash-deal “no tax” arrangements cost you: no invoice, no credit.
You have four years — don’t lose it
You generally have four years to claim an ITC, counted from the due date of the return in which you could first have claimed it. (The window shrinks to two years for listed financial institutions and for businesses whose taxable sales topped $6 million in each of the two prior years.) That means a backlog of uncaptured tax from earlier periods is usually still recoverable — catching up messy books often pays for itself in recovered ITCs alone.
Where holdbacks and timing come in
On the tax you pay to subcontractors, the credit follows when the tax becomes payable — which, with a holdback, can be later than the invoice date. Getting ITC timing right is part of the same discipline as the rest of your GST/QST filing. Clean, coded books are what capture every credit — see contractor bookkeeping or talk to us. General information, not advice for your business.
Frequently asked questions
Can a contractor claim back the GST/QST paid on materials?
Yes, if registered for GST/QST — as input tax credits (GST) and input tax refunds (QST), to the extent the materials are used in your commercial activity, and with valid supporting invoices.
What do I need on an invoice to claim the credit?
A valid invoice or receipt whose detail scales with the amount, including your business name on larger invoices and the supplier’s GST/QST registration number. No registration number generally means no credit.
How long do I have to claim an input tax credit?
Generally four years from the due date of the return in which it could first have been claimed — two years for listed financial institutions and businesses with over $6 million in taxable sales in each of the two prior years.
Sources
- Revenu Québec – Claiming ITCs and ITRs (four-year time limit)
- CRA – Input tax credits
- Revenu Québec – ITCs and ITRs: conditions and restrictions
- CRA – RC4022, General Information for GST/HST Registrants (documentary requirements)