When you sell used business equipment, vehicles, or other assets, you generally must charge GST/HST on the sale price, even though you originally paid tax on the purchase. However, there are important exceptions and special rules that depend on what you're selling, how long you've owned it, and whether the buyer is registered for GST/HST. Understanding these rules helps you stay compliant and avoid unexpected tax bills. If you're registered for GST/HST and sell used business property, this CRA rule may apply to you: you must charge tax on the sale unless a specific exemption exists. The general principle is straightforward: used goods sold by a GST/HST-registered business are taxable at the same rate as new goods. However, the key exception is the used goods exemption. This allows small business owners to avoid collecting GST/HST on used goods under specific conditions.
Usually yes, but there's an exception. If you bought the equipment from a non-registered person and you're not a dealer in that type of equipment, you can use the used goods exemption and skip the tax. If you originally claimed an input tax credit on the purchase, you must charge tax on the sale.
You're considered a dealer if buying and selling used goods is part of your regular business activity. Dealers cannot use the used goods exemption, even on old items. If you run a used equipment resale business or flip assets regularly, you must charge tax on every sale.
No. The used goods exemption and input tax credits work together. If you claim an ITC on the purchase, you must charge tax on the sale. If you use the exemption on the sale, you shouldn't have claimed an ITC on the purchase.
Report all taxable sales as regular revenue on the appropriate line of your GST/HST form. Keep clear records showing why each sale qualifies for an exemption (if it does), including documentation of the original purchase and who you bought from.
You only charge tax on the business-use percentage. If your work truck was 70% business and 30% personal, charge tax on 70% of the sale price. Keep detailed records showing how you calculated the business-use amount.