Input tax credits for charities
As a GST/HST registrant, you may recover the GST/HST you paid or owe on purchases and expenses related to your commercial activities by claiming input tax credits (ITCs) on line 106 of your GST/HST return.
Special rules for claiming ITCs apply to charities. Charities have to use a special net tax calculation method. When you use this method, you remit 60% of the GST/HST you collect and claim ITCs only on certain items. In addition, you can claim the public service bodies' rebate for GST/HST you paid or owe and did not claim as an ITC, whether that tax relates to your taxable or exempt activities. For more information on how to calculate your net tax, see Net tax calculation for charities.
Your charity, as a whole, can elect not to use the net tax calculation for charities if you want to use the general rules or the simplified method to calculate ITCs. Both methods are explained in Guide RC4022, General Information for GST/HST Registrants.
To elect not to use the net tax calculation for chairites, you have to meet one of the following:
- you make supplies outside Canada in the ordinary course of your business;
- you make zero-rated supplies in the ordinary course of your business; or
- you make all or substantially all (90% or more) taxable supplies.
To make the election, complete Form GST488, Election or Revocation of an Election Not To Use the Net Tax Calculation for Charities, and send it to us.
Only for designated charities
Only designated charities may still be eligible to use the Special Quick Method. A designated charity is a charity, one of whose main purposes is to provide employment or employment related-assistance to individuals with disabilities. It is designated because it applied to have certain exempt services it provides made taxable. These charities are not eligible to use the net tax calculation for charities. For information on this special method, see Special quick method of accounting for public service bodies. Also for more information on designated charities, see Employment assistance to individuals with disabilities.End of specific information
To claim ITCs or a rebate, you need specific information on your invoices. For more information, see Invoice requirements.
You may be able to file your GST/HST return over the internet. See GST/HST NETFILE to determine if you are eligible.
Forms and publications
- Guide RC4022, General Information for GST/HST Registrants
- Guide RC4082, GST/HST Information for Charities
- Form GST488, Election or Revocation of an Election Not To Use the Net Tax Calculation for Charities
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