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.
New Car Sales Tax
New car sales 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 everywhere.
PST and HST rates vary from province to province, so the amount payable on a new 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.
How Much Taxes Will You Pay For A New Car In Canada?
As mentioned, when you purchase a new car, you’ll be subject to a federal GST of 5% and a PST depending on the province you live in. For example, if you purchase a new car in Ontario valued at $35,000, you’ll pay a GST of 5% and a PST of 8%. That comes out to $4,550 in taxes.
|PST (8% *$35,000)||$2,800|
|GST (5%* $35,000)||$1,750|
|Total HST (13%)||$4,550|
|Total Car Cost ($35,000 + $4,550)||$39,550|
Do You Pay Taxes On Used Cars In Canada?
In most cases, taxes will apply when you purchase a used car in Canada. The total amount of taxes payable depends on the province and the combination of provincial and federal taxes.
Used Car Sales Taxes By Province
The sales tax when buying a used car differs from province to province as follows.
Used Car Sales Tax In Alberta
No provincial sales tax is charged in Alberta when you buy a used car. Instead, you only have to pay the 5% GST required to buy a car from a dealership. No taxes are applied in private used vehicle sales.
Used Car Sales Tax In British Columbia
In BC, you’ll pay anywhere from 12% to 20% in sales tax, depending on the value of the vehicle and where you purchase it from.
For instance, if you buy a used car from a dealership, you’ll pay the 5% federal GST. But if you buy privately, GST doesn’t apply, though you will still have to pay 7% for vehicles up to $55,000, and upwards of 20% for vehicles sold over $150,000.
This PST is charged on top of the federal GST.
Used Car Sales Tax In Ontario
No sales tax is paid to a seller when a buyer purchases a used car in Ontario. But the buyer may have to pay 13% tax. The exact amount is based on the greater of the purchase price or the wholesale value of the vehicle, the latter of which can be found by browsing the Canadian Red Book.
Used vehicles that are at least 20 years old might require a professional appraisal to determine its true value.
Used Car Sales Tax In Quebec
When buying a car in Quebec, 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. 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 these two amounts: the sale price or the estimated value.
Used Car Sales Tax In Saskatchewan
In Saskatchewan, used vehicles bought from a dealership are charged 11% HST.
Used vehicles that are bought privately for personal or farm use with a sale price of no more than $5,000 are exempt from the 6% PST. Cars purchased for more than $5,000 are charged PST on the sale price.
Used Car Sales Tax In Manitoba
All car sales come with a 7% retail sales tax (RST) in Manitoba, whether purchased at a dealership or privately. An additional 5% GST is charged on a car sale from a dealer.
Used Car Sales Tax In Nova Scotia
Private used car sales are taxed the 15% Nova Scotia Sales Tax (NSST) — with certain exemptions — which is based on the greater of the purchase price or the Canadian Red Book value upon vehicle registration.
Used Car Sales Tax In Prince Edward Island, Newfoundland and Labrador, And New Brunswick
The Maritime provinces — PEI, Newfoundland, and New Brunswick — require a 15% tax to be paid on privately-sold used cars. The tax is calculated based on the purchase price of the vehicle or the average wholesale value.
Car Sales Tax In Canada: Dealership vs. Private Sales
Not only does your location play a role in the type of taxes you pay when you buy a car, but so does the source of your vehicle purchase. More specifically, car sales tax might differ depending on whether you buy from a dealership or from a private seller.
Car Sales Tax In Canada: Dealership
Depending on how expensive the car is that you’re buying, you could be spending a lot more in taxes in BC. But for moderately-priced vehicle purchases, the Maritimes provinces charge the highest taxes at 15%, followed closely behind by Quebec at 14.975%.
On the other end of the spectrum is Alberta, which requires just 5% charged on a used vehicle purchased at a dealership.
|British Columbia||5%||7% – 20%||12% – 25%|
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Car Sales Tax In Canada: Private Sales
Regardless of whether you buy privately or from a dealer, the ranking of provinces in terms of sales tax is pretty much the same. In the case of private sales, the Maritimes once again ranks highest in terms of taxes charged (unless you’re buying an expensive car in BC), with Alberta coming in last place at 0%.
|British Columbia||N/A||7% – 20%||7% – 20%|
What Happens If 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 buy it in, drive it home, then transfer the title and registration to your home province. Again, this service can cost you a couple hundred dollars or so.
What is a vehicle identification number (VIN) and why is it important when purchasing a car?
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.
Do I have to pay taxes on a used car?
Do I have to pay taxes on a private sale?
What are the car sales taxes for Yukon, Nunavut, and the Northwest Territories?
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.
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