Capital Asset Internal Sale or Disposal
Capital assets include land, buildings, furniture, equipment, books, artwork and other assets funded from any source, including research awards. At the University of Toronto, all purchases that fall under the above definition and have a life expectancy greater than one year and a value of $5,000 or more (excluding related costs, e.g. freight and taxes) are considered capital assets. This definition is applicable regardless of whether the purchase was funded by operating, ancillary, capital or restricted funds.
The University currently does not maintain capital asset listings centrally. Departments are required to maintain a record, or inventory, of capital assets to facilitate management and audit requirements.
For a detailed explanation of capital assets see the Guide to Financial Management – Capital Assets.
The following is the general procedure for capital asset disposals:
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1. Download Form
2. Complete Section A
- List quantity, description of equipment, manufacturer name, model/serial number, building/room number, etc.
- The original cost should be available on departmental listing of capital assets. If this information cannot be determined by the department with custody of the asset, enter “Not available” in the column Original cost. Also include the PO number or the year the equipment was purchased.
3. Send form to Procurement Services
4. Find Buyer
5. Obtain Approval
6. Send Completed Form to Financial Services
Email: Eric Marianayagam
Campus Mail: Capital Accounting, Financial Services Department, 215 Huron Street, 2nd Floor
Additional Important Information
- Trade-ins: Forward a copy of the Capital Asset Disposal Form to Procurement Services referencing the FIS purchase order number or if the purchase of equipment is over $25,000 before trade-in reference the FIS purchase requisition number.
- External Sales: Prepare an invoice to the buyer and attach a copy of the completed Capital Asset Disposal Form to the Accounts Receivable copy of the invoice. Process the invoice according to established procedures. Update the departmental capital asset records to remove the asset.
- Internal Sales: The selling department prepares and processes the journal entry in FIS for the proceeds of disposition. The selling department would remove capital asset from their capital asset records; the buying department would add the capital asset to their capital asset records.
- Tax Implications on External Sales of Capital Assets:
- Harmonized Sales Tax (HST) – Equipment used in commercial activities prior to sale must be subject to HST. Sale of equipment used in non-commercial activities (ie. research or administrative) are not taxable and therefore, not subject to HST.
- Sales outside Canada: If transferring the capital asset outside of Canada, consult the University Customs Broker for information on duties and cross-border regulations.
- Obtain payment for external sales: Payments received in relation to external sales which are processed with reference to an invoice issued by the selling department should be forwarded to: Accounts Receivable, 215 Huron Street, Toronto, ON M5S 1A2
If there is any question as to collectability, release the asset only upon receipt of payment.