Automotive

HST implication for car sales to car dealership - Ontario

  • Last Updated:
  • Dec 24th, 2021 4:41 pm
[OP]
Member
Mar 7, 2011
396 posts
121 upvotes
Toronto

HST implication for car sales to car dealership - Ontario

Hi, I am looking to dispose of a car. I am looking to potentially sell to a car dealership to avoid potential headache. I know that:

1. you get tax benefit when you trade-in for a new purchase to a dealership
2. Seller do not collect the tax when selling privately (the buyer remits the tax when registering the car)

But what I can't find is, what happens when you sell to the dealership directly? As a GST/HST registrant, does a dealership have to pay you the HST on the purchase price? And since you as a seller does not have a business revenue of more than $30k in sales per year (an assumption), you do not need to remit this tax back to the government?

I have already tried my googlefu and search around different areas (reddit, rfd, etc) and all info either lead to trade-in or selling privately. Any help would be much appreciated!
14 replies
Deal Fanatic
Sep 10, 2008
9502 posts
7892 upvotes
Kitchener
The dealership is NOT paying HST to buy a vehicle from you as they're turning the vehicle around and reselling it. The new buyer will pay HST on the vehicle to the dealer and the dealership will remit that.
Newbie
Nov 23, 2014
92 posts
103 upvotes
Regina, SK
jujojoh wrote: And since you as a seller does not have a business revenue of more than $30k in sales per year (an assumption), you do not need to remit this tax back to the government?
The first reply was correct but I just want to comment on this part of the original post. Small suppliers do not have to collect GST but if they do it doesn't mean they can keep it.
[OP]
Member
Mar 7, 2011
396 posts
121 upvotes
Toronto
Rob_EV wrote: The dealership is NOT paying HST to buy a vehicle from you as they're turning the vehicle around and reselling it. The new buyer will pay HST on the vehicle to the dealer and the dealership will remit that.
I am not following - any other supplies that vendors purchase, they need to pay HST. Turning around vehicle and reselling does not exempt them from paying HST on supplies (in this case, cars) from paying HST. Just because I am not HST registrant would not preclude dealership not to pay HST on their supplies (cars)?
[OP]
Member
Mar 7, 2011
396 posts
121 upvotes
Toronto
100OceanSpray wrote: The first reply was correct but I just want to comment on this part of the original post. Small suppliers do not have to collect GST but if they do it doesn't mean they can keep it.
I forgot that part is true - if small suppliers do collect it, technically they do need to remit it
Deal Fanatic
User avatar
Sep 9, 2012
5784 posts
4929 upvotes
Oakville, ON
jujojoh wrote: I am not following - any other supplies that vendors purchase, they need to pay HST. Turning around vehicle and reselling does not exempt them from paying HST on supplies (in this case, cars) from paying HST. Just because I am not HST registrant would not preclude dealership not to pay HST on their supplies (cars)?
Vehicles are different in how they’re handled when you sell to a dealer. The dealer will NOT be paying you any HST when they buy your car. If you agree on a $10,000 sale price then they cut you a cheque for $10,000. Nothing more.
[OP]
Member
Mar 7, 2011
396 posts
121 upvotes
Toronto
CanadianLurker wrote: Vehicles are different in how they’re handled when you sell to a dealer. The dealer will NOT be paying you any HST when they buy your car. If you agree on a $10,000 sale price then they cut you a cheque for $10,000. Nothing more.
I see - so exactly same as if it was a private transaction. Thanks!
Deal Addict
Sep 13, 2012
2378 posts
1861 upvotes
Vaughan, ON
Lol HST scheme aspirations…only on RFD.
Member
User avatar
Mar 28, 2011
203 posts
159 upvotes
Local Ontarian Scotl…
I'll refresh this interesting topic.

So, if I trade in my car for the dealer for 10.000., and buy new one from him for 20.000, I'll pay HST only on extra 10.000. how it works

The question is:
If I would like to buy car from another dealer, can I transfer (use) this portion of HST?
(HST is gov. tax, not dealer funds, correct?)
Deal Addict
May 16, 2017
2362 posts
3083 upvotes
Beket wrote: I'll refresh this interesting topic.

So, if I trade in my car for the dealer for 10.000., and buy new one from him for 20.000, I'll pay HST only on extra 10.000. how it works

The question is:
If I would like to buy car from another dealer, can I transfer (use) this portion of HST?
(HST is gov. tax, not dealer funds, correct?)
No.

What "portion" of HST - you mean selling your car to one dealer and buying from another?

Two different HST registrants - they can't transfer HST credits/debits between each other unless they are exchanging the goods that go with it.

The tax collected IS dealer funds until the amount owing is calculated and remitted by the dealer. HST is a value-added tax; the remitted amount of HST from an HST registrant is the difference between their input credits on cost of goods/services they purchase and their sales debits for vehicles/parts/services they sell. This is the rationale for charging you NET HST upfront based on the value of a trade-in WHEN it is done as a single transaction.
Deal Fanatic
Oct 26, 2008
6838 posts
2615 upvotes
BC
OP (back in August) and Beket above need to understand that when a dealer "buys" a car from you they are not registering it at Service Ontario.

It becomes part of their inventory, goes directly to auction, or they pass it on through the trade.

Might be different if they wanted your vehicle to use long-term as a company vehicle, as a customer loaner, parts delivery, etc.

But in general the "purchase" of a vehicle from you doesn't imply registered ownership of it by the dealer.
It is just a natural consequence of them being a registered motor vehicle dealer.

So completely different from the reverse situation where a dealer sells a car to an individual.

Hope that clarifies it.
Member
User avatar
Mar 28, 2011
203 posts
159 upvotes
Local Ontarian Scotl…
robsaw wrote: No.
So, let me simplify for PHDs in other disciplines))

To save on HST, two transactions must be done with one company (HST registrant).
Last edited by Beket on Dec 24th, 2021 6:47 pm, edited 1 time in total.
Member
User avatar
Mar 28, 2011
203 posts
159 upvotes
Local Ontarian Scotl…
Gentlemen (ladies?), thank you for your help and clarification.
It seems, I stuck with Toyota, which is, probably, not bad.

Top