From commercial to non-commercial use
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From commercial to non-commercial use
When you change the primary (more than 50%) use of capital personal property from commercial to non-commercial, we consider you to have sold the property, bought it back, and paid the GST/HST based on the basic tax content of the capital personal property at that time.
This change-in-use rule is not applicable to financial institutions. Financial institutions have to claim their input tax credits (ITCs) for capital personal property based on the actual extent of the property's use in commercial activities.
Example
You operate several commercial and residential rental buildings in Alberta. You pay the GST on the purchase of a tractor to use primarily for the commercial buildings (commercial activity).
Cost of tractor $10,000
GST payable $10,000 × 5% = $ 500
You claimed an ITC of $500 on the purchase. You later change the use of the tractor from commercial activities to primarily non-commercial activities, at which time the tractor's fair market value is now $4,000. You have to pay the GST based on the basic tax content of the tractor because you are considered to have sold it or to have bought it back.
You pay (self-assess) the GST of $200 because you changed the primary use from commercial activities to non-commercial activities. Include this amount on line 103 of your GST/HST return, or include it in your line 105 calculation if you are filing electronically. You cannot claim a public service bodies' rebate, as the rebate you could have claimed was accounted for in the basic tax content calculation (amount B).
Forms and publications
- Guide RC4022, General Information for GST/HST Registrants
- Guide RC4082, GST/HST Information for Charities
- GST/HST Memorandum 8-1, General Eligibility Rules
- GST/HST Memorandum 8-2, General Restrictions and Limitations
- Date modified:
- 2013-04-12