CRA confirms that a lessee engaged in HST-exempt activities can be subject to double HST on equipment which it imports then subsequently purchases from the non-resident lessor
An Ontario private vocational college is the lessee of equipment from a non-registered non-resident which it imported itself, thereby resulting in an obligation to self-assess Ontario HST under s. 220.07 (in addition to paying GST on the importation). A year later, it exercises an option under the lease to purchase the equipment, thereby triggering Ontario HST again under s. 220.06.
CRA confirmed that this situation results in such double tax, and indicated that it has raised this anomaly with Finance.
Neal Armstrong. Summary of 23 March 2017 CBA Commodity Taxes Roundtable, Q.15 under ETA s. 220.06(1).