Commercial activity (GST/HST)

The CRA says a taxable supply is one made in the course of a commercial activity, and that registrants can generally claim input tax credits to the extent they use, consume or supply purchases in their commercial activities. Buyers and sellers can meet the term when they check whether a business charged and claimed GST/HST correctly. See HST compliance on a business purchase.

What the Act covers

• A business carried on by the person, except to the extent it involves exempt supplies, and other than a business carried on without a reasonable expectation of profit by an individual, a personal trust or a partnership of individuals
• An adventure or concern in the nature of trade, on the same terms
• A supply of real property that is not an exempt supply, and what is done in connection with it

What to ask

Ask which of the seller’s supplies were taxable and which were exempt, and how input tax credits were claimed against them. The CRA’s general guide for registrants notes that a registrant may have to calculate the basic tax content of a property if it increases or decreases its use in commercial activities. The input tax credit entry explains the credit.