OT- Contractor (HST ITC Issue)

[phiscock-g851W1bGYuGnS0EtXVNi6w at public.gmane.org]

> | From: phiscock-g851W1bGYuGnS0EtXVNi6w at public.gmane.org
>
> | OK, here's the definitive (Canada Revenue Agency) word on HST: you
> | *cannot* apply for an ITC (input tax credit) on capital property. That
> is,
> | you pay out the HST when you purchase the equipment, and you can't get a
> | refund of the HST later.
>
Hugh Redelmeier wrote:

> I don't think that this is correct.  See
>   <http://www.gst-tax.com/GST/Accounting_for_GST.htm>
>
> There are different kinds of capital property.  At least "real
> property" and "personal property" (and "Passenger vehicles and
> aircraft" which have their own complex GST rules).
>
> Most stuff you care about is "personal property".  If it is used
> mostly to provide taxable supplies, then you get to claim an ITC.

>From the web site that Hugh references:
---------------------------------------
Capital personal property
The general rules for claiming ITCs for capital personal property such as
computers, equipment, and office furniture are as follows:

If you use the capital personal property primarily (more than 50%) in your
commercial activities, you can claim a full ITC.
If you use the capital personal property 50% or less in your commercial
activities, you cannot claim an ITC.

Example
You buy a computer for $2,000 plus GST/HST. You will use the computer 60%
in your commercial activities and 40% for personal use. Since you will use
the computer more than 50% in your commercial activities, you can claim an
ITC for the full amount of the GST/HST you pay for the computer.
----------------------------------------

That's interesting. If you drill down into the CRA website and find
'Capital Personal Property', the above is a direct quote, so it's
authoritative. The crux of the matter is the phrase 'Capital Personal
Property' for which the above rule seems to apply. I missed that on the
first go-round.

Thank-you, Hugh, for pointing that out. I think you saved us some money.

Incidentally, I believe this is a change (in favour of business) from the
PST rules.

Peter





-- 
Peter Hiscocks
Syscomp Electronic Design Limited, Toronto
http://www.syscompdesign.com
USB Oscilloscope and Waveform Generator
647-839-0325

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