HST/GST on Truck Purchases and Leases in Ontario

Buying or leasing a truck in Ontario involves more than negotiating prices or choosing between models—it also requires understanding your tax obligations. The Harmonized Sales Tax (HST) and Goods and Services Tax (GST) can significantly affect your total cost and cash flow, especially if you’re acquiring the truck for business purposes.

In this article, we break down how HST/GST applies to truck purchases and leases in Ontario, outline how eligible businesses can recover these taxes, and explain how working with Mehmi Financial Group can help you optimize your tax position.

What Is HST and GST in Ontario?

Ontario uses the Harmonized Sales Tax (HST) system, which combines:

• 5% Federal GST
• 8% Ontario Provincial Sales Tax (PST)

📌 Total HST Rate: 13%

This tax applies to most goods and services in Ontario, including commercial trucks, trailers, and lease payments.

HST on Truck Purchases

When you buy a truck, whether new or used, the full 13% HST is added to the purchase price. This applies whether the transaction is through a dealership or a private sale (with some exceptions for certain private sellers or trade-ins).

Example:

• Truck price: $80,000
• HST (13%): $10,400
• Total cost: $90,400

✅ Businesses registered for GST/HST may be eligible to recover the tax via input tax credits (ITCs)—more on this below.

HST on Truck Leases

When leasing a truck, HST is not paid upfront on the full truck value. Instead, you pay 13% HST on each monthly lease payment.

If your lease includes a buyout option, HST is also applied to the buyout amount at the end of the lease.

Example:

• Monthly lease: $1,200
• HST (13%): $156
• Monthly total: $1,356

✅ This approach may offer better cash flow management, especially for startups and growing businesses.

Claiming Input Tax Credits (ITCs) on HST/GST

If your truck is used exclusively or primarily for commercial purposes, and you’re registered for GST/HST, you can usually claim 100% of the HST as an input tax credit.

Requirements to Claim ITCs:

• GST/HST registration with the CRA
• Truck used for commercial activities (not personal)
• Proper documentation (invoices, lease contracts, mileage logs if partially used)

📌 Related: Invoice Factoring for Truckers: Get Paid Faster and Improve Cash Flow

HST/GST Rebates and Exemptions

1. Zero-Rated and Exempt Buyers

Certain individuals or groups may be exempt from HST, such as:

• Qualifying Indigenous purchasers
• Certain nonprofit or government entities
• Farmers or carriers under specific programs

Always confirm eligibility with a tax advisor or CRA guidelines.

2. Used Truck Purchases from Private Sellers

In some cases, purchasing a used truck from a private individual (who is not GST/HST registered) may not include HST. However, this comes with higher risk due to limited buyer protections.

Buying vs Leasing: HST/GST Comparison

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Frequently Asked Questions

Is HST always applied to truck purchases in Ontario?

Yes, HST (13%) applies to most new and used truck purchases in Ontario unless purchased privately from someone not registered for GST/HST.

Can I claim back the HST on my truck?

Yes—if your business is GST/HST-registered and the truck is used for commercial purposes, you can recover the HST via input tax credits.

Is leasing better than buying for HST purposes?

Leasing can offer better cash flow since HST is paid monthly, not upfront. However, buying may yield a larger, quicker ITC if you're registered and have available capital.

Do I pay HST on the lease buyout?

Yes. If you purchase the truck at the end of the lease, HST applies to the buyout value.

Final Thoughts

Understanding how HST/GST works is essential when buying or leasing a truck in Ontario. From upfront costs to claiming input tax credits and avoiding unexpected tax bills at lease-end, knowing your obligations and opportunities can directly impact your bottom line.

Let Mehmi Financial Group be your financial co-driver. We’ll help you plan your truck acquisition strategy the smart way—with cash flow, tax efficiency, and compliance in mind.

📌 Also read:

• Refinancing Your Commercial Truck in Ontario
• Emergency Cash Flow Financing in Canada

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