HST Leased Vehicle

Apr 19, 2006 1 Replies

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Michael 20 years ago

Hi,

Thinking of leasing a new vehicle for my company.

Question: How is the HST calculated? Is it calculated on the total price or only on the payments. I spoke to a colleague who said that the HST on the lease value of 18,000 or 2700 I would be able to claim as an input tax credit. I told her I didn't think so and I thought that the HST (65.00) on the monthly payments is all I could claim as an input tax credit.

I won't be able to talk to the accountant until mid next week, but I am curious on this now. Anyone shed some light?

Thanks

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!-! 20 years ago

You are correct, your colleague is wrong. GST/HST and/or PST is/are charged on the lease or rental payments, not on either the cost of the vehicle or the "total price" or "lease value".

This is one reason a lease is often a poorer financial choice than a purchase - in some provinces you are paying PST on the interest component of your payments. (GST/HST may also be a factor depending on the personal use of the vehicle, but it's less significant because at least part of the GST/HST is an input tax credit.)

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