Once a proprietorship becomes a GST registrant than they must apply GST to the sale of any service, goods, or asset.
The GST rules are based on the type of supply. Ordinarily, all supplies are GST rated unless otherwise specified.
Some supplies are Zero rated.
Some supplies are exempt.
How and when you claim the ITC on a payment varies by the type of payment.
Generally you claim the ITC on a service when it is due and on an asset when your receive title.
There is an exception when an asset is used partially for business use and partially for personal use such as a vehicle. This depends on the type of vehicle, asset class, and the percentage of business use.
This pages may help to clarify how to calculate the ITC eligibility percentage.
Calculate input tax credits – ITC eligibility percentage
When you dispose of an asset, then you claim the eligible ITC percentage remaining that you had not previously claimed.
For this reason I find it useful to maintain both a fixed asset continuity worksheet by each individual asset, grouped by class, with business use % and ITC claimed notes.
It is more complex to calculate the eligible GST-HST ITC to claim on vehicles. This is further complicated by electric vehicles. Please note that the CRA reference has not been updated by the new electric vehicle classes.
CRA GST/HST Memorandum 8-2, 2008-03
General Restrictions and Limitations
Refer to this third party source for an easier to understand and follow table re ITC allowable on vehicles.
Allan Keon, CPA PC
Tax and HST ITC for purchased or leased vehicles
" Individuals and partnerships must amortize the HST ITC based on the CCA rate depicted above with consideration to the percentage of use in commercial activities unless the percentage is 90% or more, in which case the full HST ITC will be claimed. For instance if a vehicle is purchased for $40,000 plus 13% HST ($5,200), the HST ITC will be calculated as below:"