What are input tax restrictions related to?

Input tax restrictions are primarily concerned with the types of purchases or business activities. This means that not all purchases made by a business may be eligible for input tax recovery. For example, certain types of goods or services that are consumed for exempt supplies or private use might not allow businesses to reclaim VAT or input tax. Specific regulations often outline categories of items where input tax cannot be recovered, emphasizing the importance of understanding what qualifies for input tax deductions.

The other options relate to different aspects of business operations but do not specifically address the core concept of input tax restrictions as set by tax legislation. While the percentage of sales might reflect the amount of VAT output, it doesn’t dictate what can be reclaimed in input tax. Similarly, the types of accounting methods or a company's total revenue are linked to financial reporting or tax calculations but do not directly influence the types of purchases or activities that qualify for input tax recovery.