Boom truck leases: the accounting and the GST/HST

R 03 mCapital or operating lease under ASPE 3065

Private enterprises may report under ASPE, the Accounting Standards for Private Enterprises; public companies report under IFRS. A private company that has not chosen IFRS uses Section 3065 for leases.

As summarized by a national accounting firm in 2015, a lessee classifies a lease as a capital lease if any one of three tests is met: ownership is reasonably assured to pass to the lessee, including through a bargain purchase option; the term is usually 75% or more of the asset's economic life; or the present value of the minimum lease payments is usually 90% or more of its fair value¹. A lease that meets none of them is an operating lease: no asset or liability is recorded, and the rent is expensed straight-line over the term¹.

In an offer, look for the buyout and its price against what the truck should be worth then, the lease length and renewal terms, and every required payment, fee and end-of-term amount. Your accountant needs the truck's remaining economic life, its fair value and the discount rate to use.

Example. Two offers on a used truck with 96 months of economic life left. Offer A, a 48-month lease with no purchase option, runs 50% of the life (computed): an operating lease unless its payments reach the 90% test. Offer B, a 60-month lease-to-own with a buyout well below the truck's expected value, runs 62.5% (computed), but the bargain buyout makes ownership reasonably assured: a capital lease¹.

R 06 mIFRS 16: right-of-use assets

IFRS 16 drops the capital and operating split for lessees. For periods beginning on or after January 1, 2019, a lessee recognizes a right-of-use asset and a lease liability for every lease with a term of more than 12 months, unless the asset is of low value². Whether that exemption could cover a truck-mounted crane is your accountant's call; plan on it not applying.

So an ASPE capital lease and an IFRS 16 lease both show the truck and a liability on the balance sheet, with depreciation and interest; an ASPE operating lease shows only rent. A lease on the balance sheet adds to assets and debts, which can move the ratios a bank tests in loan covenants. Ask your banker how a lease counts before you sign.

R 09 mShort-term rentals

A contractor who needs a boom truck for one job usually rents it by the hour, week or month. The IFRS 16 requirement covers leases of more than 12 months², so a single-job rental normally falls outside it. Under ASPE, a short rental of a truck with years of life left fails the usual 75% term test and passes no ownership, so it is generally an operating lease¹.

• Rollovers. A monthly rental that keeps being extended can run past 12 months. Ask how the term is measured when you expect to extend.
• Operated hire. When the supplier provides the operator and runs the crane, the contract may be a service rather than a lease, which changes the tax (below). We did not research the accounting.
• Minimums and standby. Call-out minimums, mobilization and standby belong in any comparison.

For example, a bare rental (operator not included) for a five-month bridge job is under the IFRS 16 line² and an operating lease under ASPE, but for GST/HST five months is more than three, so the longer-lease rule below applies. Published operated and bare rates are on boom truck rental rates and in the rental rate converter.

R 12 mGST/HST: a lease is a supply of property

For GST/HST, CRA treats a lease or licence of the use of tangible personal property as a supply of that property³; the Excise Tax Act's definition of supply names rental and lease⁴. A bare boom truck rental or lease is taxed as a supply of goods, at the rate of the province where it is made.

Each payment period is its own supply. Every lease interval is deemed a separate supply, made on the earliest of the first day of the interval, the day its payment becomes due, or the day it is paid³. That is how the rate on a long lease can change partway through.

The buyout is a sale. On a lease-to-own, exercising the purchase option is treated as a sale, delivered where and when you stop holding the truck as a lessee and start holding it as a buyer³. The sale rules then set the tax on the buyout.

Operated hire may be a service. When the supplier also provides the operator, the question is whether the contract is one supply of a service or a lease plus a service. CRA says that is a determination of fact; a single price does not decide it⁵. We found no CRA page that classifies an operated crane rental either way. If it is a service, the supply is made in the province of the recipient's address that the supplier obtains, such as the business address most closely connected with the supply⁶, not the delivery province. Ask the supplier how it treats operated hire.

R 15 mPlace of supply: the three-month line

For a bare lease, which province's rate applies depends first on how long you have continuous possession of the truck.

Is a boom truck a specified motor vehicle? CRA says the term generally covers all motor vehicles, apart from certain racing cars and prescribed vehicles, and that none are prescribed at present³. A road-registered boom truck looks likely to be one, which makes registration the test on a long lease. The definition rests on Customs Tariff classifications we did not check; confirm it with your accountant.

Example, short rental. A six-week bare rental delivered in Alberta and driven to a Saskatchewan job is made in Alberta, fixed at delivery³: 5% GST on the whole rental⁷. Saskatchewan PST is separate (below).

Example, long lease. In CRA's own example, a four-year vehicle lease starts in British Columbia; the lessee moves to Ontario after four months and registers the vehicle there in the fifth. The first five payments carry 5% GST, because the vehicle had to be registered in BC when those intervals began, and the rest carry 13% HST³. Quebec's QST follows the same three-month line⁸.

R 18 mGST, HST and provincial sales taxes

The HST includes the provincial part. Nova Scotia's fell to 14% on April 1, 2025⁷, so check older lease schedules. British Columbia, Saskatchewan, Manitoba and Quebec also levy their own sales taxes, and each treats operator-included hire differently from a bare rental:

These are general rules. BC's lease rules leave out multijurisdictional vehicles⁹, and Manitoba taxes equipment an out-of-province business brings in once it stays six or more days in a year¹⁴. Ask which applies.

R 21 mInput tax credits

A GST/HST registrant recovers the GST/HST it pays on purchases and expenses for its commercial activities by claiming input tax credits¹⁶; in Quebec an input tax refund covers the 9.975% QST¹⁵. For a registered contractor using the truck on taxable work, the tax on each payment comes back through the return, so the real cost is the payment before tax.

CRA's conditions, in short¹⁶: you are a registrant, the truck is for your commercial activities (the claim covers only that share of its use), you keep the supplier's invoices, and you claim within CRA's time limit.

The quick method catch. CRA says a business using the quick method cannot claim input tax credits on operating expenses, but may on purchases it claims capital cost allowance on, such as vehicles and large equipment¹⁶. Ask which side lease payments fall on before you compare leasing with buying.

An unregistered business cannot recover the tax this way, which is why the rent vs lease vs buy calculator leaves GST/HST out.

R 24 mWhat this page does not cover

CCA on a leased truck. One regulation reaches the lessor's side. A lease to an arm's-length customer for a term of more than one year, on property worth more than $25,000 that is not exempt property, makes the truck specified leasing property, and the lessor's deduction is then limited¹⁷. Exempt property includes a truck designed for hauling freight on highways¹⁷, the same question as Class 16 on boom trucks and CCA. Who claims CCA on a lease-to-own truck is not covered by any source we hold.

• The accounting for operated hire, under ASPE or IFRS.
• Provincial sales taxes beyond the four provinces above, and their exemptions.
• Changes to ASPE 3065. The 75% and 90% tests come from a summary dated November 2015¹; we did not check changes after 2022.
• Lessor accounting, sale-leasebacks and IFRS 16 detail.

Questions to take to your accountant

1. Do we report under ASPE or IFRS, and does this lease go on the balance sheet?
2. What economic life and discount rate should the tests use?
3. Is the truck a specified motor vehicle, and which province's GST/HST applies to each payment?
4. Is our operated hire a service or a lease, and which provincial sales tax applies where the truck will work?
5. Can we claim input tax credits on the payments, given our accounting method?
6. If we buy the truck out, how is the buyout taxed, and who claims CCA from when?

BoomTrucks.ca is an independent reference: we do not rent, sell or lease equipment. For offers to take to your accountant, request a quote; it only goes to a company with your consent.