Don't Get Stalled by Unexpected Vehicle Taxes
Buying a car is the second-largest purchase for most Canadians. The tax rules depend heavily on who you buy from.
1. Buying from a Dealership
Dealers are registered businesses. They must charge the full applicable GST/HST for your province on the final sale price.
- Benefit: If you trade in a car, you only pay tax on the difference between the new car price and the trade-in value.
2. Private Sales (Individual to Individual)
When you buy a car from a neighbor, they don't charge you tax. Instead, you pay the tax to the Ministry of Transportation (or equivalent) when you transfer the ownership.
- The "Red Book" Value: In many provinces, you pay tax on whichever is higher: the price you paid or the wholesale "book" value of the car. This prevents people from "under-declaring" the price to save on tax.
3. Family Gifts
Most provinces allow for the tax-free transfer of a vehicle between close family members (parents, children, spouses). You must fill out a specific "Sworn Statement" to qualify.
Summary Table
| Seller Type | Tax Paid At | Rate | |-------------|-------------|------| | Dealer | Time of Sale | Full GST/HST | | Private | Registration | Provincial Rate (PST/HST) | | Family Gift | Registration | $0 (with form) |
Check current rates for your province here →
Run the Canada GST/HST calculator for province-based totals →