While the actual price of a car might not vary much from province to province, the taxes you pay on your purchase might. Certain provinces charge much higher sales taxes than others. And depending on how expensive your car is, you could be paying quite a bit more in one province over another.
Let’s take a look at the car sales taxes in Canada when purchasing a vehicle.
Key Points
| Sales Tax Rate From Dealership | The sales tax rate for both used and new cars purchased from a dealership is the same, but it varies by province |
| Sales Tax Rate From Private Sale (used car) | Used cars purchased from private sellers don’t have to pay GST, but will be charged a provincial sales tax (which vary by province) when the car is registered. |
Car Sales Tax On New And Used Cars In Canada
Both new cars and used cars come with either Goods and Services Tax (GST), Provincial Sales Tax (PST), or Harmonized Sales Tax (HST, a combination of GST and PST), depending on the province. The federal GST is 5% and is charged in all provinces when buying from a dealership.
PST and HST rates vary from province to province, so the amount payable on a new or used car purchase will vary depending on what the province charges in provincial sales tax. For instance, HST is currently 13% in Ontario, and in Alberta, there is no PST or HST.
Learn more: Should You Buy A Used Or New Car?
Taxes On Cars In Canada: New And Used Cars From A Dealership
| Province | GST | Provincial Rate | Total |
| British Columbia | 5% | 7% – 20% | 12% – 25% |
| Alberta | 5% | N/A | 5% |
| Saskatchewan | 5% | 6% | 11% |
| Manitoba | 5% | 7% | 12% |
| Ontario | 5% | 8% | 13% |
| Quebec | 5% | 9.975% | 14.975% |
| New Brunswick | 5% | 10% | 15% |
| Nova Scotia | 5% | 10% | 15% |
| Newfoundland | 5% | 10% | 15% |
| PEI | 5% | 10% | 15% |
Do You Have To Pay Sales Tax On Used Car When Buying From A Private Buyer?
Yes and no. Private sellers are not businesses, so you’re not required to pay them for sales tax. However, provincial governments may charge you the sales tax when you go to register your car. As such, used car sales from private sellers don’t have any GST tax (federal tax). That said, the provincial sales tax rate on used car sales from private sellers is generally higher.
Learn more: Should You Buy A Car From A Private Car Seller?
Used Car Sales Tax Rate From Private Sellers
| Province | GST | Provincial Rate |
| British Columbia | N/A | 12% – 20% |
| Alberta | N/A | N/A |
| Saskatchewan | N/A | 6% |
| Manitoba | N/A | 7% |
| Ontario | N/A | 13% |
| Quebec | N/A | 9.975% |
| New Brunswick | N/A | 15% |
| Nova Scotia | N/A | 15% |
| Newfoundland | N/A | 15% |
| PEI | N/A | 15% |
Extra Sales Tax For Expensive Cars
If you purchase a new car for over $100,000, you may be subject to the Federal luxury tax. This is a federal tax that’s calculated as either 10% of the total vehicle price or 20% of the amount over $100,000. The federal luxury tax is charged at the point of sale and is remitted by the dealer.
This amount is added before the GST/HST is applied to the vehicle price. That means you’ll be paying this additional tax on top of any other sales tax applicable in the province you’re buying in.
New Car Sales Tax Vs Used Car Sales Tax By Province
The sales tax when buying a used car differs from province to province as follows.
Car Sales Tax In Alberta
No provincial sales tax is charged in Alberta when you buy a new or used car.
- Dealership – You only have to pay the 5% GST when buying a car from a dealership.
- Private sale – No taxes are applied in private used car sales in Alberta.
Car Sales Tax In BC
In BC, the amount of taxes you pay on a new or used car will vary depending on whether you buy from a dealership (a GST registrant) or a private seller.
- Dealership – You’ll pay the 5% federal GST and a 7% provincial tax for cars under $55,000. The provincial sales tax can increase to 20% depending on the car price due to the BC Luxury Car Sales Tax.
- Private sale – You will not pay any GST. Instead, you’ll pay a PST amount between 12% to 20% depending on the car price.
The amount of PST you are charged depends on the wholesale value (based on the Canadian Black Book) of your vehicle or the sales price, whichever is greater.
Learn more: How Much Is The Sales Tax On Cars In BC?
Car Sales Tax In Ontario
- Dealership – When buying a new or used car in Ontario, you’ll pay 13% HST. If you buy the vehicle at a registered dealership, you’ll pay these taxes when you finalize the purchase with the dealer, who will complete the car’s registration on your behalf without the need for you to visit a Service Ontario centre.
- Private sale – If you buy a used vehicle privately, you’ll pay the 13% retail sales tax (RST) when you register the vehicle at a Service Ontario office. The seller does not collect this tax on a private sale.
Learn more: How Much Are Sales Tax On Cars In Ontario?
Car Sales Tax In Quebec
- Dealership – When buying a car in Quebec at a dealership, you’ll need to pay 9.975% in Quebec Sales Tax (QST) in addition to the 5% GST on any used vehicle purchased from a dealer.
- Private sale – When buying from a private seller, you’ll only have to pay the QST.
Dealerships charge GST based on the purchase price of the vehicle, while the QST is based on the higher of the sale price or the estimated value.
Car Sales Tax In Saskatchewan
- Dealership – In Saskatchewan, new or used vehicles bought from a dealership are charged 5% GST and 6% PST.
- Private sale – Used vehicles that are bought privately are charged 6% PST. However, used vehicles for personal or farm use with a sale price of less than $5,000 are exempt from the 6% PST.
Car Sales Tax In Manitoba
- Dealership – In Manitoba, vehicle sales from dealerships come with a 7% retail sales tax (RST), and a 5% GST.
- Private sale – Private sales come with a 7% retail sales tax (RST)
Used Car Sales Tax In Atlantic Canada
The Maritime provinces — New Brunswick, Nova Scotia, PEI, and Newfoundland — require 15% HST to be paid on both privately-sold used cars and those sold at a dealership. The tax is calculated based on the purchase price of the vehicle or the average wholesale value.
Used Car Sales Tax In The Territories
In Yukon, Northwest Territories, and Nunavut, you’ll be charged 5% GST when buying a used car at a dealership, but no taxes are charged when purchasing from a private seller.
Can You Buy A Car From Another Province?
When you buy a car, you’ll need to register it with the government in the province that you live in. As such, buying a vehicle from another province can complicate the situation a little.
You could wait to register the car until you bring it back home to your province. In order to do that, you’ll need to pay a transportation service to bring the car to you, which can cost you a few hundred dollars, depending on how far you’re transporting the vehicle.
Otherwise, you could register the car in the province that you bought it in, drive it home, and then transfer the title and registration to your home province. Again, this service can cost you a couple of hundred dollars or so.
Can You Save Money By Purchasing A Car From A Different Province?
Since the taxes charged on used cars are different from province to province, you may consider looking to a province that charges less in taxes, like Alberta. The best way to take advantage of cost savings when purchasing a car in another province is to trade in your car for another.
When you do this, the price of the new car will be reduced by the value of the car you’re trading in. In this case, you’ll only have to pay taxes on the reduced purchase amount. And if you’re financing, the payments can be reduced even further.
Can You Save On Taxes If You Buy A Car In Cash?
Whether you purchase a car outright or finance it, taxation will remain the same. You’ll still need to pay tax on the vehicle if you buy it in cash, provided that the vehicle price doesn’t change.
Do I Have To Pay Tax On A Car If I Buy It From A Family Member?
Buying from a family member would likely be considered buying from a private seller, whether you’re related or not. However, you may be exempt from paying tax if the car is given to you as a gift.
For instance, in Ontario, a vehicle can be transferred among family members without the need for taxation through the submission of a Sworn Statement for a Family Gift of a Used Motor Vehicle. You can access this form online at ServiceOntario.ca or in person at a Service Ontario centre.
How To Minimize Sales Tax On Vehicle Purchases In Canada
You may not be able to avoid paying taxes completely in most cases, but you may be able to reduce how much you pay for these costs:
- Buy From A Private Seller. In some provinces, like Alberta and Saskatchewan, tax rates are higher when buying from a dealership than with a private seller. In this case, you may want to consider purchasing your vehicle in a private sale to reduce your taxes.
- Trade In Your Old Vehicle. You may be able to reduce the taxable amount if you trade in an old vehicle and put it towards the purchase of a new one. In this case, you only pay tax on the difference between the new vehicle’s price and the trade-in value of your existing car.
- Find Out If You Qualify For An Exemption. You may be exempt from paying taxes under certain conditions. For instance, family transfers or those registered under the Indian Act of Canada may be exempt from sales tax on vehicle purchases.
Final Thoughts
If you’re looking to avoid paying taxes altogether when buying a car, the only option you have is to buy a used vehicle from a private seller in Alberta. Otherwise, you’ll be subject to federal and/or provincial taxes when buying a car, though the exact amount will differ depending on which province you’re buying in.
