Before you buy a car in Canada, it’s important to factor in any sales taxes that the seller might charge. The sales tax on cars in BC can drastically change how much you’ll pay overall.
In BC, a number of factors can affect the amount and type of taxes you’ll pay for a new or used car, such as where you buy it, how much it costs, and what kind of vehicle it is. Let’s see how much you need to pay in sales tax if you buy a car in BC.
How Much Is The Sales Tax On Cars In BC?
If you buy a new or used car from the GST registrant (for example a dealership) in British Columbia, you’ll need to pay both Federal Goods and Services Tax (GST) and Provincial Sales Tax (PST).
If you buy a vehicle from a private seller in BC you will not pay GST but you will need to pay PST when your register the vehicle with the ICBC.
The PST amount in BC can vary between 7% to 20% when you purchase a car from a GST registrant and 12% to 20% when you purchase a car from a private seller.
How much PST you are charged depends on the wholesale value of your vehicle (based on the Canadian Black Book) or the sales price, whichever is greater.
How Much Is The Sales Tax On New And Used Cars In BC From A Dealership?
In BC, when you purchase a new or used car (passenger vehicle) from a dealership (GST registrant) the GST charged is 5%. The PST charged will increase incrementally between 7% to 20%.
|Car Price||PST Rate|
|Less than $55,000||7%|
|$55,000 – $55,999||8%|
|$56,000 – $56,999||9%|
|$57,000 – $124,999||10%|
|$125,000 – $149,999||15%|
|$150,000 and over||20%|
Do You Pay Tax On Private Car Sales In BC?
If you purchase a car from a private seller, you’ll only have to pay PST. The exact amount you pay will be based on the wholesale value of your vehicle (based on the Canadian Black Book) or the sales price, whichever is greater.
|PST Tax On Cars At Private Sale|
|Less than $55,000||12%|
|$55,000 – $55,999||12%|
|$56,000 – $56,999||12%|
|$57,000 – $124,999||12%|
|$125,000 – $149,999||15%|
|$150,000 and over||20%|
How Do You Pay Car Sales Tax In BC?
Buying a car from a dealership or online retailer is pretty simple because taxes are applied at the sales point. Paying taxes on a private sale is a bit more complicated. The PST is only calculated and collected when you register the car with the Insurance Corporation of British Columbia (ICBC).
When you register a car, the Insurance Corporation of British Columbia (ICBC) will calculate your PST rate based on the purchase price and the vehicle’s fair market value. You’ll be charged PST on whichever is higher.
They do this to stop buyers from frauding the system to pay less PST. If you disagree with their assessment, you must get a professional appraisal.
Are There Any Tax Discounts For Purchasing A Zero-Emission Electric Car In BC?
If you buy a zero-emission electric vehicle (ZEVs) in BC from a dealership or private seller, you may be eligible for a lower PST rate:
|Car Price||PST On ZEVs At Dealerships||PST On ZEVs At Private Sale|
|Less than $75,000||7%||12%|
|$75,000 – $75,999||8%||12%|
|$76,000 – $76,999||9%||12%|
|$77,000 – $124,999||10%||12%|
|$125,000 – $149,999||15%||15%|
|More than $150,000||20%||20%|
How To Calculate Sales Tax On Cars In BC
To calculate the sales tax on a car purchase in BC, just follow these steps:
- Determine the purchase price of the car
- Multiply the purchase price by the tax rate to see the amount of tax owed
- Add the tax owed to the car’s purchase price to get the total amount due
Here’s a table to show you what car sales taxes can cost in BC. Let’s say you buy a car from a dealership who is a GST registrant (meaning you’ll get charged GST and PST):
|Car Price Before Sales Tax||Sales Tax||Car Cost After Sales Tax|
|$45,000||$2,250 (5% GST) + $3,150 (7% PST)||$50,400|
|$55,000||$2,750 (5% GST) + $4,440 (8% PST)||$62,190|
|$56,000||$2,800 (5% GST) + $5,040 (9% PST)||$63,840|
|$57,000||$2,850 (5% GST) + $5,700 (10% PST)||$65,550|
|$125,000||$6,250 (5% GST) + $18,750 (15% PST)||$150,000|
|$150,000||$7,500 (5% GST) + $30,000 (20% PST)||$187,500|
How Your Sales Tax Affects Your Car Loan Cost In BC
Since there’s additional interest and fees involved, things can get a bit more expensive and complicated when you finance a vehicle with a car loan in BC. Sales tax is usually included in the final price and can increase the total amount you need to borrow.
For example, if you want to buy a $45,000 car from a dealership in BC, you’ll be charged a 5% GST and a 7%PST. If you add the sales tax amount to your car loan, it’ll affect the total cost of your car.
Below is a table showing the difference in cost between adding your sales tax to the loan versus paying it upfront.
|Car Loan Without Sales Tax||Car Loan With Sales Tax|
|Car Sales Tax (5% + 7%)||$5,400 (paid upfront)||$5,400 (added to car loan)|
|Down Payment (10%)||$4,500||$4,500|
|Total Amount To Finance||$40,500||$45,900|
|Term||60 months||60 months|
|Total Interest Cost||$6 365.80||$7 214.57|
Can You Reduce Your Car Sales Tax By Trading In Your Car?
Unfortunately, trading in your car won’t reduce your sales tax as it’s based on the wholesale value (based on the Canadian Black Book) of your vehicle or the car sales price, whichever is higher.
However, you can reduce the amount you borrow by trading in your car. Since you’re borrowing less to buy the car, you’ll also have smaller loan payments.
Other Costs To Consider
Before you buy a car in BC, make sure to factor in all the other possible costs, such as:
- Vehicle Registration – When you buy a car in BC, you’ll also have to register it with the provincial government. The amount you end up paying in registration fees depends on the vehicle’s make, model, weight, and production year.
- Insurance – BC drivers are required to have a minimum amount of third-party liability insurance. While insurance premiums are still based mainly on the make and model of your car, your driving record will be a significant factor here too.
- Dealer Documentation Fees – If you buy a car from a dealership in BC, you’ll normally have to pay to cover the cost of processing all the paperwork involved. Documentation fees vary based on your dealership’s policies and vehicle type.
Thinking About Buying A Car In BC?
Then don’t forget to add up all the taxes and other fees involved in finalizing the sale, because they can cause you to pay much more for a car than you’re comfortable with. Plus, there are a ton of different costs to consider once the car is in your possession. For more details about tax on cars in BC (or other provinces), talk to Loans Canada.