Where a trade-in forms part of the consideration paid for a purchased automobile, the amount of GST/HST and provincial sales tax (“PST”) payable on the purchase may be reduced to reflect the trade-in. Is the cost of the automobile for purposes of the standby charge formula in s. 6(2) also so reduced?
After noting that “Redclay [indicated that] ‘was payable’ requires any GST/HST or PST actually paid pursuant to a vehicle purchase or lease contract to be included in the definition of cost for the purposes of subsection 6(2),” CRA indicated that under ETA s. 153(4)(c) “the GST/HST paid is not reduced because of an exemption [as referred to in s. 6(7)] but is reduced because of a calculation of the GST/HST base,” and the same analysis appeared to apply in the PST provinces. Accordingly, only the actual GST/HST or PST paid would be included in the cost for s. 6(2) purposes.