When you buy a used car, it’s important to remember that the purchase price is not your only expense. The largest cost you’ll need to account for over and above the price you agree to pay is the sales tax. Whether you live in Ontario, Quebec, British Columbia, or any other province, you’ll need to pay some amount of sales tax when you register your new car following a purchase. However, the exact amount you’ll need to pay can vary widely from one province to the next.
This article explains how sales tax on used cars is calculated in each province across Canada. We’ve also mapped out luxury taxes and federal versus provincial breakdowns where they exist. Learning these rules will help you budget for this expense when planning your used vehicle purchase.
Note, the details in this guide are reviewed and updated on a regular basis, but could be subject to change. We recommend verifying them independently as part of the buying process.
Tax Laws on Used Cars in Canada
- Tax on Used Cars in Ontario
- Tax on Used Cars in Quebec
- Tax on Used Cars in British Columbia
- Tax on Used Cars in Alberta
- Tax on Used Cars in Saskatchewan
- Tax on Used Cars in Manitoba
- Tax on Used Cars in Atlantic Canada
- Tax on Used Cars in Yukon, Northwest Territories, and Nunavut
- Used Vehicles as Gifts
- Conclusion
- Frequently Asked Questions
Tax on Used Cars in Ontario
When you buy a used car in Ontario, you’ll need to pay the HST (Harmonized Sales Tax) of 13 per cent. As with other uses of the HST, this includes both the 5% federal sales tax and 8% provincial sales tax.
If you buy a used vehicle at a registered dealership, you’ll pay these taxes when you complete the purchase at the dealership. At this time, the vehicle registration will be completed for you and you won’t need to visit ServiceOntario.
If you buy a used car privately, you’ll need to pay the same percentage in retail sales tax (RST) when you register the vehicle at your local ServiceOntario outlet. Note the seller doesn’t collect this tax when a vehicle is sold privately.
The tax billed is based on either the Canadian Red Book wholesale value or 13% of the actual purchase price, whichever is higher. You can find the minimum sales tax you’ll be required to pay in your Used Vehicle Information Package (UVIP), which the seller is required to pick up at ServiceOntario and provide to you. If you have reason to believe your vehicle could be worth less than the Red Book value, you can go through the process of having the car appraised and submit that appraisal when you register. When you complete this process, your assessed RST may be lower.
Tax on Used Cars in Quebec
In Quebec, when you buy a used vehicle at a registered dealership, you’ll have to pay both the 5% federal Goods and Services Tax (GST) and the 9.975% Quebec Sales Tax (QST). The dealer will calculate the tax owing and collect it to submit to the Société de l’assurance automobile du Québec while registering your vehicle.
If you purchase from a private seller, you don’t need to pay GST, but you are still required to pay QST.
The amount to be paid is assessed based on either the actual price of the vehicle or the valuation estimate provided in the Guide d’évaluation Hebdo (automobiles et camions légers), whichever is higher.
As is the case in Ontario, a used vehicle buyer in Quebec can submit an appraisal when registering the vehicle. If the appraised value is lower than the estimated wholesale value, the buyer may pay a lower amount in sales tax.
Tax on Used Cars in British Columbia
In October 2022, British Columbia changed how sales tax is calculated on used vehicles. B.C. now follows the system used in other provinces where the amount of tax is assessed based on the higher of either the wholesale value or the actual price paid for the vehicle.
This adds another layer of calculation to what is already the most complicated used vehicle sales tax regime in the country.
First, let’s look at what you pay in provincial sales tax (PST) if you buy a used car from a registered car dealer:
- If the vehicle you buy is priced below $55,000, you’ll pay 7% PST on the purchase.
- If you pay between $55,000 to $55,999.99, the percentage goes up to 8%.
- From $56,000 to $56,999.99, you’ll be assessed a PST of 9%.
- If you pay between $57,000 and $124,999.99, you’ll be charged 10% PST.
- Once the price paid is $125,000 or more, B.C.’s luxury tax rate applies as well.
- For cars priced from $125,000 to $149,999.999, you’ll be charged 15% PST.
- If you pay more than $150,000 for a used vehicle, the PST charged tops out at 20%.
When you purchase from a private seller, the numbers look higher on paper. You’ll pay 12% tax on any car purchase price up to $125,000, at which point the same 15% and 20% tax rates apply for higher brackets as outlined above. This is because dealerships charge federal GST, which is not charged on private sales, which means you actually pay slightly more at a dealer at certain price points.
Regardless of where you buy your car, you’ll have to pay the sales tax when you register it with your ICBC Autoplan broker. Don’t delay in registering your vehicle, though. “If you delay registering the vehicle, you may be required to pay PST directly to the B.C. Ministry of Finance,” says the ICBC website. How long a delay will result in this transfer of payment is not specified.
Tax on Used Cars in Alberta
Just across the border in Alberta, PST is not charged on any purchases. This means that when you purchase a used vehicle from a dealer, you’ll only be required to pay the 5% GST. If you buy a used vehicle privately, you don’t need to pay sales tax at all.
This is why neighbouring provinces require you to pay the sales tax at the time of registration rather than at payment. You’ll still pay the tax on a vehicle if you buy it in Alberta and need to put another province’s plates on it.
Tax on Used Cars in Saskatchewan
If you purchase a used vehicle at a car dealership in Saskatchewan, you’ll be charged 5% GST and 6% PST. If you buy from a private seller, you’ll pay only the 6% PST, which is assessed on the actual purchase price. In either case, the payment is due at the time of registration. Sales taxes are waived on private sales if the actual purchase price or the Canadian Red Book wholesale value, whichever is higher, is less than $5,000.
Tax on Used Cars in Manitoba
In Manitoba, a 7% provincial retail sales tax (RST) applies on used vehicle sales, and a registered dealer is also required to charge 5% GST. With a dealer, you’ll pay the assessed tax at the time of the purchase and the dealer will assist you with registering the vehicle. If you purchase it privately, you’ll pay the RAST when you register the vehicle with the provincial auto insurance authority, Autopac. Sales tax is assessed on either the actual selling price or the Sanford Evans Gold Book wholesale value of the vehicle, whichever is higher.
Tax on Used Cars in Atlantic Canada
The exact wording varies slightly in the Atlantic provinces, but the result is the same. You’ll pay 15% HST when purchasing a used vehicle in New Brunswick, Prince Edward Island, Nova Scotia, and Newfoundland and Labrador. This applies regardless of whether you purchase at a dealership or privately. The tax rate is due at registration and is assessed based on either the actual sale price or the wholesale value, whichever is higher.
Tax on Used Cars in Yukon, Northwest Territories, and Nunavut
There is no territorial sales tax in Yukon, Northwest Territories, or Nunavut. Therefore, you’ll only need to pay sales tax on a used vehicle purchase when you buy from a dealership, and in that case you’ll only be charged for the 5% federal GST.
Used Vehicles as Gifts
All provinces have some form of sales tax exemption when a car is acquired as a gift. In most instances, this exemption only applies when a registration transfers between spouses. Some provinces extend this privilege to other family members, including Ontario. Consult the Ministry of Transportation in your province for more information.
Conclusion
With rare exceptions, car buyers will need to pay some form of sales tax on a used vehicle purchase in Canada. It’s important to be aware of the tax laws in the province where you plan to register your vehicle. This allows you to map out a full budget for paying taxes and make an informed decision when deciding how much to spend on your next car. Sales tax can be a significant expense, so avoid unwanted surprises by preparing in advance for these charges.
Frequently Asked Questions
What is the federal tax rate on used cars in Canada?
When you buy a used car from a registered dealer, you will be charged the 5% federal Goods and Services Tax (GST). This is in addition to any provincial sales tax that may apply. When you buy from a private seller, some provinces do not require you to pay GST.
What is the provincial tax rate on used cars in Ontario?
In Ontario, the provincial tax rate on used cars is 8%. You’ll need to pay this regardless of whether you buy from a dealership or a private seller.
Do you have to pay taxes on private sales of used cars in Canada?
In jurisdictions where provincial sales tax (PST) is charged, you’ll need to pay PST on private used car sales. This will be due when you register your vehicle with the provincial motor vehicle licencing authority and receive your licence plates.