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Can I avoid paying back the sales tax on my rental motorhome if I trade it?

• A few years ago I purchased a motorhome, not only for personal use but also to rent out to make some extra income. Since I was using it as a rental, I was able to get out of paying the sales tax with the understanding that if I ever sold the motorhome I would have to pay sales tax on the current value of the motorhome at the time. Well, the time has come, and I want to sell it. If I were to use the motorhome in a trade to purchase a less expensive trailer, could I get out of paying the sales tax on the motorhome and pay only the tax on the new trailer? What is my obligation to Revenue Canada?

• Answer:

  No. You didn't "get out" of anything. You conducted business according to tax laws. You received Input Tax Credits on an item for business use and resale. You must COLLECT HST/GST on the sale of the motorhome and remit the sales tax to CRA. If the replacement home is also going to be used in business, you will claim ITCs on this as well.