Question 1

Does an equipment rental agreement need to be registered under the PPSA in Canada?

Accepted Answer

Under the Personal Property Security Act (PPSA), which is enacted in all common-law provinces and territories, a lease of goods for more than one year may be treated as a security interest. Registering a financing statement protects the owner against third-party claims. While not always mandatory for short-term rentals, registration is strongly recommended for high-value equipment.

Question 2

Is GST or HST charged on equipment rentals in Canada?

Accepted Answer

Yes. Equipment rentals are considered a taxable supply under the Excise Tax Act. If the owner is registered for GST/HST (mandatory once revenue exceeds CAD $30,000 over four consecutive quarters), they must charge and remit GST (5%) or the applicable HST rate depending on the province. Some provinces also apply PST separately.

Question 3

What happens if the rented equipment is damaged or lost?

Accepted Answer

The renter is generally liable for loss, theft, or damage to the equipment during the rental period. This agreement specifies the renter must pay the full estimated replacement value if the equipment is damaged beyond repair or lost. The security deposit, if included, provides initial coverage, but the renter's liability is not limited to the deposit amount. Insurance coverage is recommended.

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