Use of Courtesy or Demonstration Vehicles

Motor vehicle dealers acquire vehicles for the purpose of resale. However, they may place some of their vehicles at the disposal of their employees or customers. In such cases, dealers that have the status of a large business must remit the QST on each vehicle used in this way during a given month.

We consider that the dealer has made a sale of the vehicle on the last day of the month. The dealer is required to calculate and remit QST on 2.5% of the sum of the purchase price of the motor vehicle and the GST calculated on the purchase price as if it had actually been collected. Any fraction of a month during which a vehicle is used for a purpose other than resale counts as a full month.

This rule applies until December 31, 2020, to vehicles made available to employees or customers. Depending on when the vehicle was used in this way, dealers can claim an ITR for the QST remitted at the rate of 25% for 2018, 50% for 2019 and 75% for 2020.

These rules do not apply under the GST system.


A dealer that is a large business places motor vehicle A (which has a purchase price, including GST, of $12,000) at the disposal of an employee on March 1, 2018.

On March 10, 2018, the vehicle is sold by the dealer in the ordinary course of the dealer's activities. On that date, the dealer places another vehicle, vehicle B (which has a purchase price, including GST, of $20,000), at the disposal of the employee.

On March 25, 2018, vehicle B is sold by the dealer, and another vehicle, vehicle C (which has a purchase price, including GST, of $15,000) is placed at the disposal of the employee. The employee has used three vehicles in the course of the same month. The dealer must therefore remit the QST for the month on the purchase price of the three vehicles as follows:

Vehicle A ($12,000 x 2.5%)$300.00
Vehicle B ($20,000 x 2.5%)+$500.00
Vehicle C ($15,000 x 2.5%)+$375.00
QST payable ($1,175 x 9.975%)$117.21

Since the vehicles were all used by the employee in 2018, the dealer can claim an ITR equal to 25% of the QST (25% × $117.21 = $29.30).

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