Words and Phrases - "consignment"

Application of GST on general principles or under s. 177(1) whenever there is a consignment sale

A consignment is an arrangement in which an owner delivers their goods to another person (the "consignee") on the understanding that the consignee will sell the goods. ...

There are two common types of consignment arrangements:

• a sale by agent arrangement where title to the goods is transferred directly from the owner to the purchaser through the consignee as agent; or
• a purchase and resale arrangement where title to the goods passes from the original owner to the consignee and then to the final purchaser.

Regardless of the type of consignment arrangement, the final purchaser must pay the GST/HST when buying taxable goods sold on a consignment basis.

Example of application of s. 177(1)(e)

Mr. and Mrs. Patel, who are non-registrants, are owners of a boat that they used for recreational purposes. They deliver the boat to the Marina By the Sea in order to have the marina sell it and agree to pay the marina a 10% commission for carrying out the sale. The marina is a registrant and acts as agent in making the sale on behalf of the Mr. and Mrs. Patel.

In this case, the marina must charge and account for the GST/HST on the sale of the boat to the purchaser because Mr. and Mrs. Patel are not required to collect the tax (they are not registrants and the boat was not used in commercial activities). In turn, the marina does not charge or account for the GST/HST on the commission charged to Mr. and Mrs. Patel for carrying out the sale.