Sales of used property

As a rule, the sale of used property (including property seized or repossessed by a creditor) is taxable at 5% GST and 9.975% QST. Consequently, an antique dealer that is a registrant must, in most cases, collect the taxes on property sold. However, used property is not taxable if sold by a person not engaged in commercial activities (for example, an individual who sells personal items at a garage sale).

Under the QST system, road vehicles that must be registered under the Highway Safety Code are QST-taxable even if the vendor is not engaged in commercial activities. In such cases, the QST is collected when the vehicle is registered with the Société de l'assurance automobile du Québec (SAAQ).

Persons that occupy a space at a flea market (referred to as “occupants”) are subject to the same rules as most other merchants, regardless of whether the merchandise they sell is new or used. Under the QST system, persons that make the selling space available to occupants must send us a list of the occupants containing certain information. For more information, click Flea Markets.

Purchases or trade-ins of used property

If you accept used property as a trade-in for property you sell, special rules apply to the transaction, depending on whether or not the person trading in the property (the vendor) is a registrant.

The vendor is a registrant

In general, if the vendor is a registrant, the vendor must collect GST and QST on the value of the property traded in, provided the property was used in the course of the vendor's commercial activities. In this case, you must collect GST and QST from the vendor on the full sale price of the property. This therefore requires two separate transactions.

Both you and the vendor can claim an input tax credit (ITC) and an input tax refund (ITR) for the taxes paid, since the property in each case was acquired in the course of commercial activities. The amount of GST and QST collected must be listed on both the invoice prepared by the vendor and the invoice prepared by you.

The vendor is not a registrant

In the following cases, GST and QST do not apply to the value of the property traded in:

• The vendor is not a registrant.
• The vendor is a registrant and the property traded in was not used in the course of the vendor's commercial activities.
• Under the QST system, the vendor is a large business and the property traded in is a road vehicle.

You must calculate the taxes on the net amount of the sale, that is, on the sale price of the item minus the trade-in value. There is an exception for trade-ins of road vehicles under the QST system.