GST Implications of Trading Motor Vehicles | FBC, Canada's Farm & Small Business Tax Specialist

GST Implications of Trading Motor Vehicles

For individuals or partnerships registered for GST/HST purposes.

GST/HST must be collected on the trade-in value of any passenger vehicle used 90% or more for commercial purposes. GST/HST must also be collected on the trade-in value of any motor vehicle (not just passenger) used 50% or more for commercial activities.

For Corporations registered for GST/HST purposes.

GST must be collected on the trade-in value of any passenger or motor vehicle used 50% or more for commercial purposes.

In the above cases, both the customer and the dealer involved in the transaction may claim their respective Input Tax Credits (ITC).

"If all the economists were laid end to end, they’d never reach a conclusion." — George Bernard Shaw