In a September 3, 2019 Tax Court of Canada case (Filion vs. H.M.Q., 2018-40(GST)I), at issue was whether the taxpayer could claim ITCs in respect of two recreational vehicles (RVs) held as inventory as part of his business of buying and selling various used vehicles.

how is inventory used when held, prior to sale

Taxpayer loses
The Court observed that the purchase of the two RVs in under a year, and periods of ownership of 10 and 11 months, indicated that the taxpayer acquired them as part of his commercial activities. If the taxpayer used the RVs primarily in his commercial activities, a full ITC would have been available (Excise Tax Act Paragraphs 169(1)(c) and 199(2)(a) and (b)). However, the taxpayer did not provide sufficient evidence (such as mileage logs) to demonstrate use in commercial activities. The Court concluded that they were used solely for personal activities and denied the ITCs.