If you’re buying a car, you might want to know the tax implications.
July 25, 2022
Purchasing a car, new or used, has become quite the ordeal with the pandemic-induced supply chain issues facing the auto industry these days. So, when you find your unicorn (which may or may not be a 2011 Corolla with less than 100,000km) and you’ve negotiated the price, here’s what you need to know about the taxes!
When it comes to taxes, you’ll pay a different amount based on which province you live in, who you’re purchasing from – either a dealership or through a private sale. One thing is certain – Albertans are the big winners, and Saskatchewanians take second place in saving on taxes.
Here’s a cheat-sheet on what you can expect to pay.
Purchased through a dealership:
Province | Type of tax you must pay | Provincial rate (PST, RST, QST) | Federal rate (GST) | Total |
| British Columbia | GST and PST | 7% for vehicles under $55,000 (note that BC has a scale of taxes owed): $55,000-55,999 - 8%, $56,000-56,999 - 9%, $57,000-124,999 - 10%, 125,000-149,999 - 15%, $150,000+ 20% | 5% | 12%, 13%, 14%, 15%, 20%, 25% |
| Alberta | GST | 0% | 5% | 5% |
| Saskatchewan | GST and PST | 6% | 5% | 11% |
| Manitoba | GST and RST | 7% | 5% | 12% |
| Ontario | HST | 8% | 5% | 13% |
| Quebec | GST and QST | 9.975% | 5% | 14.975% |
| New Brunswick | HST | 10% | 5% | 15% |
| Nova Scotia | HST | 10% | 5% | 15% |
| PEI | HST | 10% | 5% | 15% |
| Newfoundland | HST | 10% | 5% | 15% |
Purchased in a private sale:
Province | Type of tax you must pay | Provincial rate (PST, RST, QST) | Federal rate (GST) | Total |
| British Columbia | PST | 12% for vehicles under $124,999 (Note that BC has a scale of taxes owed: $125,000-149,999 - 15%, $150,000+ 20%) | 0% | 12%, 15%, 20% |
| Alberta | None | 0% | 0% | 0% |
| Saskatchewan | PST | 6% for a vehicle over $5,000 | 0% | 6% |
| Manitoba | RST | 7% | 0% | 7% |
| Ontario | RST | 13% | 0% | 13% |
| Quebec | QST | 9.975% | 0% | 9.975% |
| New Brunswick | PST | 15% | 0% | 15% |
| Nova Scotia | PST | 15% | 0% | 15% |
| PEI | PST | 15% | 0% | 15% |
| Newfoundland | PST | 15% | 0% | 15% |
And if you’re in the market for a luxury vehicle, you probably don’t mind that you’ll have to pay the federal luxury tax, which comes into effect in September 2022. The luxury tax is applied before GST/HST on vehicles valued at over $100,000. It will be calculated at the lesser of 20% of the value above the $100K threshold, or 10% of the full value of the car.
So, if the car is $125,000, the tax would either be 20% of the amount over the threshold, which in this case is $5,000, or 10% of the full value which is $12,500. Therefore, this buyer would pay a $5,000 luxury tax.
So, if you can get a car way cheaper in a neighbouring province, does it pay to buy it there and drive it home? It’s possible, but unlikely. There might be extra expenses you haven’t considered yet.
- You might have to ship your car if you haven’t yet registered it in your province, because you need registration to get insurance and you need insurance to drive the car!
- You could register the car in the other province, but you would have to do so again when you get the car to your own province, and both have associated costs.
- You still have to pay your provinces’ taxes when you get the car home to register it, so if you paid 6% provincial tax to Saskatchewan, you still have to pay 8% to Ontario (although if you live in an HST province and bought your car in a GST province, you only have to pay the difference). And don’t forget your proof of sale and other documents, otherwise you might find yourself paying GST again too!
- Some provinces have all-in pricing while others don’t, so there might be hidden fees you’re unaware of when first checking out the car.
- Car inspections vary in by province, so make sure to do your research.
Private sellers aren’t required to collect taxes from you when selling to you, but as soon as you register your car in your province, the province will ask for that payment, so make sure you factor that into your decision-making!
Are you buying this car to drive for a ride sharing platform, or as part of your work doing food delivery? You might want to check out our blog on the gig economy for tips on what you can claim! If you’re confused, an H&R Block Tax Expert is here to help, and if you’re ready to file your taxes, you can choose from one of four convenient ways to file: File in an Office, Drop-off at an Office, Remote Tax Expert, or Do It Yourself Tax Software.
