Change in Use

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Your use of capital property may change over the years. You will have to recover or pay GST and QST for certain changes in use.

Increased use of capital property in commercial activities

Capital property that you used in a proportion of more than 50% in your exempt activities or for personal use is now used in a proportion of more than 50% in your commercial activities. You can claim an input tax credit (ITC) or an input tax refund (ITR) to recover all or part of the GST and QST you paid.

The ITC or ITR you can claim for such property is equal to the basic tax content of the property at the time of the change in use.

Example

In 2016, you bought office furniture that was to be used in a proportion of 60% in your exempt activities. You paid $1,500 for the furniture, plus $75 GST and $149.63 QST. You did not claim ITCs or ITRs because you acquired the furniture to be used in a porportion of 40% in your commercial activities. 

In 2017, you began to use the furniture in a proportion of 60% in your commercial activities. The fair market value of the furniture was $1,200 at the time of the change in use.

You can claim an ITC and ITR as follows:

ITC = $75 × $1,200 / $1,500 = $60

ITR = $149.63 × $1,200 / $1,500 = $119.70

Decreased use of capital property in commercial activities

Capital property that you used in a proportion of more than 50% in your commercial activities is now used in a proportion of more than 50% in your exempt activities or for personal use. You must remit all or part of the ITCs and ITRs you claimed.

The GST or QST that you must remit for such property is equal to the basic tax content of the property at the time of the change in use.

Note

Special rules apply to capital property that is real property and the capital property of financial institutions.

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