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Tax implications of bartering aircraft

A COPA member recently wrote to ask an interesting question: “I found an aircraft owner who is ready to trade me his plane and take my plane in trade. My question is can we swap airplanes without paying any taxes?”

We consulted a tax lawyer to find the answer to this one!

He said: "A barter transaction is treated in the same manner as a cash transaction, since the tax is based on the consideration given, which could be in the form of cash or property. The only exception to this is found when the purchaser is acquiring the asset for resale, such that they would have no obligation to pay PST in the first place."

As far as GST goes, private transactions between non-GST registrants are not subject to GST - so you wouldn't pay that either way, whether you sold the plane or bartered it. 

So even if you do a trade you each have to pay the PST on the value of the aircraft anyway.

It isn’t much of a surprise that the government wouldn't leave that loophole open!