Automotive

Writing Low Sale Price on Bill of Sale for little/no taxes

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  • Oct 1st, 2016 6:27 am
[OP]
Member
Aug 17, 2008
458 posts
239 upvotes

Writing Low Sale Price on Bill of Sale for little/no taxes

So aside from the fiasco in my other thread with the seller and inspector, I'm continuing the hunt for a car.

I'm just curious if it's customary for the seller to be comfortable with writing an extremely low sale price on the bill of sale of a UVIP, when the wholesale value is marked as $0. This would be for the purposes of the buyer paying little taxes when registering the car.

Example: I buy a car for $15K, the UVIP lists the car's wholesale value as $0 so we write that it was sold for $1000 so I pay little taxes.

I expect some users to say it's unethical, fraud, etc. so let's just say this is for the purpose of "research". Is this common practice?
43 replies
Jr. Member
Feb 7, 2011
156 posts
18 upvotes
Ottawa
wont' matter. MTO will charge you taxes based on the blue book value of the vehicle.
Deal Fanatic
Apr 20, 2011
7747 posts
2737 upvotes
ON
guilly wrote: wont' matter. MTO will charge you taxes based on the blue book value of the vehicle.
+1
Or the price on the bill of sale.
Whichever is higher.

So if the UVIP said $0 and you put $1000, you pay tax on $1000.
If the UVIP said $1000 and you put $0, you get taxed on $1000.
[OP]
Member
Aug 17, 2008
458 posts
239 upvotes
guilly wrote: wont' matter. MTO will charge you taxes based on the blue book value of the vehicle.
aqnd wrote: +1
Or the price on the bill of sale.
Whichever is higher.

So if the UVIP said $0 and you put $1000, you pay tax on $1000.
If the UVIP said $1000 and you put $0, you get taxed on $1000.
It's the Canadian Red Book, no?

And I understand I'll pay taxes on whichever is higher (Bill of Sale price vs Wholesale Value). In this case, the car I'm seeking has a wholesale value of $0 on the UVIP but sells for about 15K in the used car market. I want to know if it's common practice to request the seller to WRITE that he sold it for significantly less and if they're usually comfortable doing this.
Deal Fanatic
Oct 26, 2008
6866 posts
2665 upvotes
BC
hvargas wrote: .... curious if it's customary for the seller to be comfortable with writing an extremely low sale price on the bill of sale ......... Is this common practice?
As with many things in life, common sense should prevail. No one likes paying taxes, but it's not realistic to think you can reduce your share to practically zero.

The common practice seems to me to be moderation - don't overdo the tax dodging. The authorities are not dumb.

For a private sale, if you are getting a car that is in above-average shape, and paying a bit above the odds, it is common to ask the seller to write down the price as quite a bit less.

If you are getting something that is not in very good condition and paying accordingly, it's not reasonable to expect that you can reduce your tax burden.
Deal Fanatic
Apr 20, 2011
7747 posts
2737 upvotes
ON
hvargas wrote: It's the Canadian Red Book, no?

And I understand I'll pay taxes on whichever is higher (Bill of Sale price vs Wholesale Value). In this case, the car I'm seeking has a wholesale value of $0 on the UVIP but sells for about 15K in the used car market. I want to know if it's common practice to request the seller to WRITE that he sold it for significantly less and if they're usually comfortable doing this.
Red book, blue book, purple book, whatever. Point is the MTO has their value and that's what they compare against.

But if this car goes for $15k and they have a wholesale value of $0, it's probably an error. Contact MTO to verify.
It doesn't usually drop to $0 unless its already near $0 in value.
For example, my old car had a wholesale of $1500 still, market rate was 3-5k.
Sr. Member
Nov 20, 2014
643 posts
147 upvotes
Toronto, ON
my sibling is friends with a cra employee. i know its not the exact same thing in thise case since the cra doesnt oversee this matter however he said whenever doing something like this, dont understate the vlaue ridiculously where it'll draw attention. it'll only catch their eyes and your file may get flagged where in the future they'll closely monitor you
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[OP]
Member
Aug 17, 2008
458 posts
239 upvotes
aqnd wrote: Red book, blue book, purple book, whatever. Point is the MTO has their value and that's what they compare against.

But if this car goes for $15k and they have a wholesale value of $0, it's probably an error. Contact MTO to verify.
It doesn't usually drop to $0 unless its already near $0 in value.
For example, my old car had a wholesale of $1500 still, market rate was 3-5k.
Hmmm I believe cars beyond x amount of years sometimes show $0 for whatever reason, so I don't believe it's an error. In this case it's an '07 so 8+ years old.

Hmmm anyways I'll keep the suggestions in mind.
Deal Fanatic
Apr 20, 2011
7747 posts
2737 upvotes
ON
The car example above was 9 years old. 05 sold in 14. Valued $1500
I don't think they drop on age until at least 10-15yrs.
Deal Expert
User avatar
Jan 27, 2004
50507 posts
14856 upvotes
ONTARIO
A buddy of mine bought a car that is listed as $0 on the UVIP. He just said it had a blown engine and was for parts only. He wrote in a value of $100. The guy rolled his eyes at him and charged him a few fiver's for tax. Maybe he got lucky?

So yes it kinda works if you're a lying stinkin cheat.
Sr. Member
May 3, 2011
671 posts
90 upvotes
How bout you donate the car and the guy donates money to you?
[OP]
Member
Aug 17, 2008
458 posts
239 upvotes
jimmyonishi wrote: How bout you donate the car and the guy donates money to you?
Or... he's a "good friend" of mine and gave me an early birthday gift :cheesygri
Deal Fanatic
Apr 16, 2007
8132 posts
3476 upvotes
Financial District B…
Buying a used car from a friend is a recipe for disaster. Should be put on the same shelf as never lending friends any money.
----------------------------Licensed Credit Bureau member, S1, FI Automotive, CCP forums most banned = x 13 and counting, guess who that is?... stomped to the curb once again
Banned
Jul 24, 2009
834 posts
577 upvotes
kitchener
I think that cars over 10 years old you can write down whatever price you want and that is the price from which you will pay tax.
Their books only apply to vehicles newer than 10 years.
So say you buy an 03 vehicle for 3000, get the seller to write you a bill of sale for 1000...you will be paying tax on the 1000.
They might call you or the seller about it to verify sometimes down the road, so make sure you are both on the same page.
That's it.
Member
User avatar
May 29, 2007
450 posts
113 upvotes
Toronto
I bought a 2010 earlier this year and for whatever reason it said the wholesale value was unavailable on the UVIP. I asked the seller to leave the price blank. The car was worth about 20k. When I went in to change the ownership I put down that I paid $12500 and paid tax on that. I thought it sounded reasonable. (Though I thought I might have trouble when the guy at the Licensing office was talking about how much he liked the vehicle I bought etc)
Deal Addict
Jul 21, 2005
2044 posts
1091 upvotes
Alberta
Is this some Ontario thing? Just curious? You have to pay some tax on used vehicle purchase?

Reason I ask is because I just bought a car off my friend (for trade in value at the dealer...aka..dirt cheap) and just paid him the cash and that was it. The only time I think it matters for the purchase price here is for insurance purposes. Curious how it works out there
Deal Addict
Mar 8, 2007
1463 posts
135 upvotes
New and used, yes.
Buy/Sell/Trade with confidence, 50+ positive feedback.
Sr. Member
Nov 20, 2014
643 posts
147 upvotes
Toronto, ON
eblend wrote: Is this some Ontario thing? Just curious? You have to pay some tax on used vehicle purchase?

Reason I ask is because I just bought a car off my friend (for trade in value at the dealer...aka..dirt cheap) and just paid him the cash and that was it. The only time I think it matters for the purchase price here is for insurance purposes. Curious how it works out there
i guess so. the liberals need every penny they can get through nonsensical taxing so they can play around with taxpayers money and waste it (and even commit fraud) for political reasons
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Deal Addict
Jan 13, 2014
2501 posts
1606 upvotes
Calgary
I kinda find this whole tax thing in ontario ridiculous. I buy a vehicle brand new - pay tax on it for the price.
I sell the car after a week to a friend and then he pays tax on the vehicle again.
He sells it after a month, the buyer pays tax again, and then again and again and the story continues.

If you sell a vehicle can you claim the amount of tax you originally paid back? if you dont then I think this is a bs legislation for money grab (just like here in Calgary they have red light camera with speed on green on every intersection, in fact there is a highway beside my house that has 90 kmph posted all over the stretch , but coming to a signal just 1 km before it changes the speed to 70 kmph with a redlight/speeding camera and after it goes back upto 90 and then 110 after 1 km).

The only thing fair that I have seen is that if you go to a dealer they will pay you the decided value of the car + tax and then why you a buy a vehicle from them it is vehicle price+tax.
Deal Expert
User avatar
Jun 12, 2003
15116 posts
1511 upvotes
Markham
It's a BS tax that gets dodged or minimized at every chance

New car buyers looking at used cars are always surprised when they realize they have to pay tax on a private sale used vehicle, at least my coworkers were
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