Canada Revenue Agency
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Consignment sales
A consignment sale is a transaction in which one party, the consignor, delivers goods to a second party, the consignee, who tries to sell the goods for the consignor.
If you, as a consignee, sell taxable goods on consignment, the consignor still owns the goods until you sell them. Therefore, even though the consigned goods are in your possession, you do not include these items in your inventory.
Consignment arrangements consist of two types:
- agency; and
- buy and resell.
If you are not buying and reselling goods, then it is likely that you are acting as the consignor's agent. See Agents if you are conducting a transaction as an agent.
Where you are buying then reselling goods, we consider two transactions to take place at the time you sell the goods:
- you buy the goods from the consignor; and
- you sell the goods to your customer.
If the consignor is a GST/HST registrant, you pay GST/HST to the consignor on the price he or she charges you and collect GST/HST from your customer on your selling price. If the consignor is not a registrant, you do not pay GST/HST to the consignor, and you collect GST/HST from your customer on your selling price.
Example
You sell clothing on consignment to a customer for $100 plus GST, which you include on your GST/HST return. You keep $40 and pay the consignor $60 from the sale. If the consignor is a GST/HST registrant, he or she charges you GST on the $60, which you can claim as an ITC on your return. If the consignor is not a registrant, he or she does not charge you GST.
When you return any unsold items to the consignor, you do not have to pay GST/HST on these items since the consignor never sold you the goods.
