I believe you might be missing the whole point I was making - the point is that this “SHAREHOLDER” did no such thing. -AND, in any case, has STILL misrepresented and diddled HST out of CRA on one end or the other…
“SHAREHOL:DERS” have power to have a say in the election of a board of directors, and that is all.
The basic legal principles underlying basic company law and contracts, not to mention the ITA and the ETA, trumps whatever fanciful thoughts that the “shareholder” misunderstands…
So then the problem is that we refer to the Shareholder, who obviously is also the Director. So we are really into semantics. According to Jeanette, my first answer may well have been correct. However, I will admit that I don’t have enough facts to give a definitive answer to @NiceGuy.
I would suppose NiceGuy may very well be a bit frustrated at how many responses he has received and how few answers.
… and you are missing yet a different point…
Sorry, I have better things today than to write textbooks, so whomever wants to drown in the entire wrong way this “shareholder” is interfering in this corporation and assist him to get himself fined and penalized, are welcome…
I get the point I was trying to make… 
most of the time.
LOL
Joe, do you even deal with owner-managed companies? Microbusinesses? Because all your advice seems to be written as if the shareholder has no influence over the company besides showing up once a year and voting a director in.
But in most cases that people on this board talk about the sole shareholder is the sole director and the sole employee of the company, they are also the President/Sec/Treas all at the same time too. Or at most there are two shareholders and same two people are the only two directors, and one is Pres, and one is Sec/Treas, and one of them or both of them are also employees of the company.
Which “hat” they are wearing at the moment is rarely documented at all let alone documented well.
@jglass
I keep my clients out of jail - and ensure they understand hats…
If people are confused and mixing up legal positions/titles, I would suggest it would be better and more ethical not to be advising the clients in ways that might amount to incorrect legal advice which could potentially cause clients great harm…
Some clients may wish to take their own appendix out in the toolshed instead of visiting, you know, an actual qualified surgeon, and that is their own fault…
But if the client visits an actual surgeon, he should not expect a rusty blunt blade to be used on the wrong appendage…
I promise my clients I will visit them in jail - this has been my standard for many years. However, I have never visited anyone in jail and have never been incarcerated either.
Jeanette, I don’t think Joe would admit to having any such unprofessional clients!
@NiceGuy
I concur with @obhorst and @jglass. This is a common scenario, and is treated similarly by the majority of accountants in Canada, including one of the largest firms in Canada, where I used to work.
HST should have been charged on the sale, so you have to assume the proceeds included GST, and calculate it as such, and have your client remit it.
The only “facts” which have been posted in this thread are allegedly that:
An UNREGISTERED individual purchased a truck
A REGISTERED CORPORATION claimed an ITC on an asset that it did not own and did not purchase
An UNREGISTERED individual sold a truck
Those are not facts necessarily calling for the recording treatment you recommend, as that would be guessing about what all and any other of the documentation may or may not say.
As noted above, an UNREGISTERED individual cannot charge HST.
Therefore, absent further documentation, it may well be the (false) claim of ITC would need to be reversed and the tax repaid to CRA.
Curative action and (re)payment of the shortfall in tax is definitely called for, but exactly what that curative action has to be according to all of the documentation cannot be determined without all of that documentation in hand.
Thank you everyone for your feedback - grateful for the replies.