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 in light of being deemed to have received a delivery under a sale by s. 136.1(1.1).
CRA confirmed that this situation results in such double tax, and indicated that it has raised this anomaly with Finance.
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|Tax Topics - Excise Tax Act - Section 136.1 - Subsection 136.1(1.1)||s. 220.06 engaged when lessee exercises purchase option on equipment leased and imported form non-resident lessor||94|
|Tax Topics - Excise Tax Act - Section 220.06 - Subsection 220.06(1)||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||212|
Relief re commercial importation applies to public service body
Example 2 – Goods imported into Canada
In a claim period, a registrant PSB resident in New Brunswick purchases commercial goods in the United States and imports them into New Brunswick for use by the PSB exclusively (90% or more) in its commercial activities in that province. The goods are valued at $15,000 (including duties), on which the PSB pays $750 in GST ($15,000 × 5%) to the CBSA at the time of importation of the goods.
The GST of $750 paid in respect of the importation of the goods is included in subparagraph 259(1)(a)(i) when calculating the GST charged in respect of the imported goods for the claim period.
Subsection 220.07(2) relieves the PSB from the requirement to self-assess the provincial part of the HST as the goods are for consumption, use, or supply exclusively in the course of commercial activities of the registrant PSB.