How Much Tax on a Used Car in Ontario

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Which sales taxes do I owe on a used car? A province-by-province guide

Buying a used vehicle? Be prepared to add taxes to your expenses

Jun 18, 2020September 2, 20214 minute read Join the conversation
You bought the car, but what taxes do you have to pay?
You bought the car, but what taxes do you have to pay?

It never hurts to save a buck, and buying a used vehicle can be a great way to do so if you're willing to trade that new car smell for letting someone else pay the up-front depreciation costs.

But it's important to be aware that even used car sales are subject to more fees than the price you see on the advertisement, and sales tax can be a big one.

You might be charged a luxury tax, provincial and federal sales taxes, or no taxes at all, depending on where you live in Canada and the nature of your transaction. Here's a breakdown of the sales taxes you'll be on the hook to pay in a used car sale across the country.

British Columbia

B.C. residents need to navigate what is, by a long shot, the most complicated used car taxation system in the country.

If you're buying a used car from a dealer, then you're looking at a lower set of provincial tax rates. But that's because dealers will also charge the federal 5 per cent GST, and so the net tax amount ends up being the same as you pay by going through a private seller — that is, as long as the fair-market value of the vehicle is less than $55,000 as assessed by the ICBC.

At that lowest price point, the provincial tax rate through a dealer is 7 per cent; this goes up to 8 per cent for the very narrow window of $55,000 to $55,999.99, and then to 9 per cent from $56,000 to $56,999.99. For vehicles valued between $57,000 and $124,999.99, the tax rate jumps up to 10 per cent. From there, the luxury tax rates kick in: you're looking at 15 per cent on a car valued from $125,000 to $149,999.99, and if you cross the $150,000 threshold, your rate hits an eye-watering 20 per cent.

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If you buy through a private seller or if you acquire a car as a gift under a circumstance that requires you to pay tax, then all of those smaller lower-priced windows are lumped together for a total provincial tax rate of 12 per cent on the ICBC's valuation. The same value windows apply for the luxury tax rates of 15 and 20 per cent on higher-value vehicles.

The tax is payable at the time of registration with the ICBC Autoplan provincial insurance broker. If you wait too long to register the vehicle, you may be required to pay the PST directly to the B.C. Ministry of Finance.

Alberta

Talk about contrasts: just on the other side of the Rockies, Alberta charges no provincial sales tax at all. This means there's no tax owing whatsoever on private sales, and you'll pay only the 5 per cent federal GST if you buy a used car at a dealership.

Because sales taxes are payable on registration in nearby jurisdictions, however, there's no benefit to a non-resident buying a used car in Alberta and taking it home.

Saskatchewan

A white-haired gentleman trying to sell an older car to a couple.

As of April 2018, Saskatchewan charges a 6-per-cent provincial sales tax on a used vehicle sold for $5,000 or more. Taxes on private sales are charged based on the actual sale price and are due at registration.

Vehicles sold privately and purchased for personal or farm use that are valued at less than $5,000, based on the higher of either the actual sale price or the Canadian Red Book wholesale value, are exempt from provincial sales tax. However, dealers must charge the PST regardless of the sale price and must also charge the 5-per-cent federal GST on all sales.

Manitoba

Manitoba's provincial retail sales tax (RST) is 7 per cent. If you buy a vehicle from a private seller, you'll be charged when you register with Autopac, the province's insurer, based on the greater of the selling price or the Sanford Evans Gold Book wholesale value. If you buy from a dealer, you pay both RST and GST at the time of your purchase.

Ontario

In Ontario, used car buyers pay 13 per cent HST. When that purchase is made with a dealer, it gets added to your bill. If you buy privately, you'll be billed at registration with ServiceOntario based on either the purchase price or the Canadian Red Book wholesale value, whichever is higher.

If you have good reason to believe the vehicle's value is lower than the Red Book value, you can have it professionally appraised and be billed based on the lower figure.

Quebec

Car buying

If you buy a used vehicle from a dealer in Quebec, you'll pay the 5-per-cent GST on the agreed-upon price plus the province's 9.975-per-cent QST on either that same actual price or the estimated value listed in the Guide d'évaluation Hebdo (automobiles et camions légers) , whichever is higher, unless the vehicle has been subject to excess damage or wear and is professionally appraised as such. While the dealer calculates the QST owing, it's payable directly to the Société de l'assurance automobile du Québec upon registration.

In a private sale, you won't pay GST, but you will still owe QST on the higher of the actual price or the estimated value, which is due on registration.

Atlantic Canada

In New Brunswick, Prince Edward Island, Nova Scotia, and Newfoundland and Labrador, the terminology changes but the net result is the same: you'll pay 15-per-cent HST on used car purchases, regardless of whether you buy privately or at a dealership. The rate is charged based on either the sale price or the wholesale valuation, whichever his higher, and is due on registration.

The Territories

No territorial sales tax is charged in Yukon, Northwest Territories, or Nunavut. Taxation only applies when a vehicle is purchased from a dealership in these jurisdictions and is charged only at the federal GST rate of 5 per cent.

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How Much Tax on a Used Car in Ontario

Source: https://driving.ca/features/feature-story/which-sales-taxes-do-i-owe-on-a-used-car-a-province-by-province-guide#:~:text=Ontario,wholesale%20value%2C%20whichever%20is%20higher.

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