Sales tax on Automotive trade ( Direct trade with end user )

  • Last Updated:
  • Feb 17th, 2020 12:05 pm
Deal Addict
User avatar
Aug 12, 2007
4685 posts

Sales tax on Automotive trade ( Direct trade with end user )

I know if you trade in your vehicle to a dealer you get a rebate on the salestax.
Does anyone know if this has been done successfully with a direct trade with a non dealer?
Pay it forward.
2 replies
Deal Addict
Nov 16, 2011
1518 posts
do you mean like a friend or something similar ....... not any type of business ?? If I could trade my car to my friend for another car, truck, atv, etc without paying tax, I would do it all the time.

If that is what you mean, answer is no. The applicable amount of tax will be calculated according to Red Book and you will have to pay it.
Alternative to Red Book is to get an appraisal of vehicle and submit to Service Ontario for tax purposes...
Deal Fanatic
Jul 4, 2004
7137 posts
There are some States and possibly some Provinces that credit you the private sale value when you purchase a replacement value but Ontario does not (in fact technically, Ontario taxes you more for private vehicle purchases because they charge you 8% PST plus 5% "other" rate (it's not GST as private car sales are not subject to GST (which is a Federal tax) so when you purchase a private sale in Ontario, you are paying the full 13% to the province versus a dealer sale where the province gets roughly 7% tax back (8% minus about 1% tax credits paid back to dealer)). I would encourage everyone to contact their provincial MP so recommended that this practice (which I suspect came from automobile dealer lobbying) should be changed.

When buying a replacement car in Vermont, the state will credit you the value of a private sale made 3 months before or after the purchase. Since Ontario already uses the UVIP, it already has a standardized way to report vehicle sales so it would be trivial for them to credit private sales as well.