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GST — stopping a client from being driven out of business

My client was a dealer of used goods, of a kind which were purchased used from consumers and sold to other consumers.

Changes to the GST legislation enacted in 1997 threatened to put my client out of business. The "notional input tax credit" on buying used goods was eliminated, yet my client would still have to collect 7% GST on every sale. This increased his costs by 7%, and he could not stay in business.

I assisted my client in designing a new structure for his business whereby he became a broker rather than a dealer, and arranged to put a buyer and seller together and collect a commission, rather than buying and reselling the goods. (Since the vendors are consumers, they don't need to collect GST.) Revenue Canada agreed to issue a GST Ruling approving this new structure. My client can now rely on this ruling, and his business is flourishing.

Problem vanished!My client was a dealer of used goods, of a kind which were purchased used from consumers and sold to other consumers.

Changes to the GST legislation enacted in 1997 threatened to put my client out of business. The "notional input tax credit" on buying used goods was eliminated, yet my client would still have to collect 7% GST on every sale. This increased his costs by 7%, and he could not stay in business.

I assisted my client in designing a new structure for his business whereby he became a broker rather than a dealer, and arranged to put a buyer and seller together and collect a commission, rather than buying and reselling the goods. (Since the vendors are consumers, they don't need to collect GST.) Revenue Canada agreed to issue a GST Ruling approving this new structure. My client can now rely on this ruling, and his business is flourishing.

Problem vanished!

(1997)