Automotive

Sales tax on used car

  • Last Updated:
  • Jul 23rd, 2020 11:28 pm
[OP]
Deal Addict
Nov 22, 2009
2776 posts
637 upvotes
Toronto

Sales tax on used car

I am considering purchasing an old vehicle, and was told by the seller that I will need to pay 13% HST on the purchase.

The UVIP is showing $0, does it mean I can put down whatever price I want? This just doesn't seem fair that the government is double taxing on used goods, because taxes have already been paid on the initial purchase.
26 replies
Deal Fanatic
Aug 29, 2011
8434 posts
5312 upvotes
Mississauga
And don't try to pull a fast one by understating the purchase price. MTO will simply use the book value to calculate the HST.
Deal Addict
Sep 8, 2017
4627 posts
4880 upvotes
GTA
blitzforce wrote: My issue is, my purchase price on my sales invoice is lower than average. Will they force me to pay more than my purchase price?
You pay tax on the greater of either the sale price on the bill of sale, or wholesale value on the UVIP. Your wholesale price is $0, so it doesn't matter that your sale price was lower than average. You will pay tax on whatever is on the bill of sale.

If it was the other way, Service Ontario would be suspicious and charge you more tax by default. For example, the wholesale is $20k but you paid $10k. They would charge you tax on $20k. Unless you can prove with an appraisal that the car is in bad condition, not running, etc. and is actually worth less than wholesale.

Actually, if the car is older than 15 years, I think Service Ontario requires an appraisal anyways. Too many people abused the $0 wholesale value, and would put $500 on the bill of sale for the $50,000 classic they just bought.
Deal Addict
Jul 21, 2005
2031 posts
1079 upvotes
Alberta
This is all crazy talk, whenever I read about these things it always feels like the discussion is from some other country. In Alberta none of this stuff applies, you buy a used car (privately) to save on paying taxes, and the price you paid is the final price, no further taxes etc.
[OP]
Deal Addict
Nov 22, 2009
2776 posts
637 upvotes
Toronto
eblend wrote: This is all crazy talk, whenever I read about these things it always feels like the discussion is from some other country. In Alberta none of this stuff applies, you buy a used car (privately) to save on paying taxes, and the price you paid is the final price, no further taxes etc.
Just look at all the speeding tickets being issued recently, they are all cash grabs for the government.
Jr. Member
Apr 28, 2014
120 posts
68 upvotes
Hannon, ON
Put zero and tell them it needs a lot of work that is why its free. Paying tax on a used item which the tax was already paid when it was bought new is just bs!
Deal Expert
User avatar
Feb 11, 2007
19465 posts
22601 upvotes
GTA
MechTech wrote: Put zero and tell them it needs a lot of work that is why its free. Paying tax on a used item which the tax was already paid when it was bought new is just bs!
No doubt a rule that dealers lobbied for to kill the private sale market.
If the women don't find you handsome, they should at least find you handy.
[OP]
Deal Addict
Nov 22, 2009
2776 posts
637 upvotes
Toronto
engineered wrote: No doubt a rule that dealers lobbied for to kill the private sale market.
Even used car dealership requires tax though.
Deal Fanatic
Oct 6, 2007
9988 posts
7937 upvotes
Kootenays
eblend wrote: This is all crazy talk, whenever I read about these things it always feels like the discussion is from some other country. In Alberta none of this stuff applies, you buy a used car (privately) to save on paying taxes, and the price you paid is the final price, no further taxes etc.
Newsflash...Alberta doesn't have sales taxes (for now). It's the only province in Canada that doesn't.
Deal Addict
Nov 12, 2004
2570 posts
1287 upvotes
Hometown
blitzforce wrote: My issue is, my purchase price on my sales invoice is lower than average. Will they force me to pay more than my purchase price?
YES when you a buy a vehicle privately, you will pay the on actual amount or the what they consider wholesale book value was at the time of the sale. They charge you whichever is HIGHER of the two. Also the wholesale book value does not take into account accidents or high mileage or condition at all really.

If you buy from a dealer or have you an appraisal from an approved appraiser you will pay the tax on that amount.

Absolutely unfair but since enough car dealership owners support enough politicians they are not going to change the law anytime soon.

https://www.google.com/search?q=sales+t ... e&ie=UTF-8
Deal Addict
Nov 12, 2004
2570 posts
1287 upvotes
Hometown
blitzforce wrote: Even used car dealership requires tax though.
Yes but dealers want it to be paid for by private sales so private sales are not at more of an advantage...

Also for dealers it has to benefit them in other ways too or they would have just lobbied the politicians they have bought and paid for and had it scrapped... Just like they have prevented a lemon law being passed.
Deal Expert
User avatar
Feb 11, 2007
19465 posts
22601 upvotes
GTA
blitzforce wrote: Even used car dealership requires tax though.
They always paid it though. Only private used sales used to be tax free. Charging tax basically made private sales 13% more expensive.
If the women don't find you handsome, they should at least find you handy.
Deal Addict
Nov 12, 2004
2570 posts
1287 upvotes
Hometown
engineered wrote: They always paid it though. Only private used sales used to be tax free. Charging tax basically made private sales 13% more expensive.
When did you not pay provincial sales tax on a used vehicle in Ontario? I bought my first car in 83 and paid it then...

When Smiling Joe and Stevo forced dumb Dalton in Ontario to convert to HST from PST and GST by threatening to with hold transfers. The rate became HST which was higher.

It really does not matter it was WRONG when it was it just PST and it just more wrong now that it is HST LOL. Sadly though we deserve it because we as voters have not INSISTED it stop, which we could do if we could get organized enough....
Deal Expert
User avatar
Feb 11, 2007
19465 posts
22601 upvotes
GTA
Canuck2fan wrote: When did you not pay provincial sales tax on a used vehicle in Ontario? I bought my first car in 83 and paid it then...

When Smiling Joe and Stevo forced dumb Dalton in Ontario to convert to HST from PST and GST by threatening to with hold transfers. The rate became HST which was higher.

It really does not matter it was WRONG when it was it just PST and it just more wrong now that it is HST LOL. Sadly though we deserve it because we as voters have not INSISTED it stop, which we could do if we could get organized enough....
Been a while, you're right. It was only no GST. but they added it in when they harmonized it. Yea, you're right, there shouldn't have been PST or HST.
If the women don't find you handsome, they should at least find you handy.
Member
Oct 26, 2007
326 posts
198 upvotes
Write $100 and pay $13 in tax.. done it a hundred times
Deal Addict
Nov 16, 2011
1510 posts
1225 upvotes
HAMILTON
If the vehicle in not listed in the data base, sales tax is payable on either the amount actually paid for the vehicle according to the receipt or an appraisal of the vehicle, whichever is the higher.

Believe it or not, the provincial tax dept has been known to follow up with sellers regarding the purchase price of a vehicle so the advice of put down $100 should be taken at face value.

No one says various taxes are fair but they are what they are.
Deal Addict
Oct 24, 2010
2569 posts
2524 upvotes
Ottawa
smacd wrote: Newsflash...Alberta doesn't have sales taxes (for now). It's the only province in Canada that doesn't.
Sure they don't have PST, but Albertans don't pay any tax, including GST, on private sales of used automobiles. 0%.

  • Saskatchewan only charges PST above a certain dollar value; no GST is charged.
  • Manitoba only charges PST; no GST is charged on used vehicle purchases.
  • In BC, ON, QC, NB, NS, PEI, and NL, though the rules and terminology are a bit different in each province, you essentially pay both the federal and provincial portions of the tax for private used vehicle purchases.

So, whether GST is charged is also dependent on where you live.
Deal Addict
Jul 21, 2005
2031 posts
1079 upvotes
Alberta
smacd wrote: Newsflash...Alberta doesn't have sales taxes (for now). It's the only province in Canada that doesn't.
Guess that makes sense, I only think of Tax as GST, which we don't have to worry about when buying used. It sounds like in Ontario they rolled the GST into the HST and then double rape you on used car sales. The whole concept of going in and paying taxes on used car price is so foreign to me, but I have only lived in Alberta so don't know how it is elsewhere.

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