Eligible Input Tax Credits
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Is the GST I paid on fuel, vehicle repairs, equipment rentals & materials purchased to complete contract - considered an 'eligible expense' with respect to GST Input Tax Credits?
Wow, that's a huge question.
As you asking this type of question, I am going to assume you are a sole proprietor just starting out who has not been keeping a regular set of books up-to-date.
First you need to become familiar with the Income Tax Act's reasonable expectation of profit
Then you need to take a look at the tax schedule T2125
. This schedule lists your allowable tax deductions.
Input tax credits relating to equipment rentals and materials purchased to earn business income are eligible IF you are a GST/HST registrant. This means you also had to have charged/collect GST/HST when invoicing your customer.
When you collect GST/HST funds from your customers, you are holding them in trust. Make sure you avoid this mistake
that most first time business owners make.
There are special rules relating to vehicle expenses
. You need to have an auto log
along with all your receipts which must meet CRA's criteria
. They are claimed on a separate section of Form T2125.
I hope that answers your question. Just post your comments back if you need something clarified.P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.