Someone gifted me a boat and provided me with the original receipt that shows what they paid for it. I can see they paid $47000 + HST (=$53110).
If I sold the boat to a friend for $50000, do I need to charge my friend an additional 13% HST? Meaning they pay me $56500? Or does my friend just pay me $50000, and then my friend separately pays the government $6500?
And did I just experience a capital gain of $3k (=$50000-$47000)? Which means I need to pay capital gains tax?
[note: I am using raw links in this answer because on matters of tax, it's important to know you are on a government site and not a random publication.]
You do not have to charge HST on the sale of the boat because it is "capital property" https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/when-register-charge.html see Footnote 1 and https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/definitions-gst-hst.html#capital
If you do not have to collect HST on a sale, then specifically for cars and boats, the seller must send it along themselves. https://www.ontario.ca/document/retail-sales-tax
You do have capital gain when you sell a thing you were using personally. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/completing-schedule-3/personal-use-property.html (That page says you don't generally have a gain, but only because such things tend to go down in value over time.) It is based on what you paid for it, except that when you are given it, you are deemed to have paid what it was worth when you acquired it. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/shares-funds-other-units/identical-properties/property-you-inherit-receive-a-gift.html
So yes, your purchaser should send along 13% of the purchase price, as explained at the Ontario link. And you have a capital gain of the difference between its value when you received it (plus any non-maintenance upgrades), and your selling price.
