Car Sales Tax in Canada 2022: Used, New and Private Car Sales

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by Enoch Omololu, MSc (Econ)

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When buying a car in Canada, the listed price is usually your top concern. That is, whether the car is worth that much and if you can afford to pay for it.

In addition to the sticker price, you should also consider car sales tax, a levy by provincial and federal authorities that increases your cost outlay by up to 15%.

This article covers new and used sales taxes in Canada and how much you can expect to pay based on your province of residence.

Car Sales Tax for New and Used Cars in Canada

When buying a new or used car at a dealership, a 5% federal Goods and Services Tax (GST) and variable Provincial Sales Tax (PST) apply.

In some provinces, GST and PST are combined and referred to as the Harmonized Sales Tax (HST).

In Manitoba and Quebec, provincial sales taxes are referred to as Retail Sales Tax (RST) and Québec Sales Tax (QST), respectively.

When your car purchase occurs through a private sale, GST no longer applies; however, some provinces increase their sales tax accordingly.

In BC, the provincial sales tax rate varies depending on the value of the vehicle being purchased.

Car Sales By Province: Dealership

The sales tax you pay when you purchase a used or new car at a dealership:

ProvinceFederal Sales Tax (GST)Provincial Sales Tax (PST/RST/QST)Total Car Sales Tax
Alberta5%0%5%
British Columbia5%7%*12%*
Manitoba5%7%12%
New Brunswick5%10%15%
Newfoundland5%10%15%
Nova Scotia5%10%15%
Ontario5%8%13%
PEI5%10%15%
Québec5%9.975%14.975%
Saskatchewan5%6%11%

*The car sales tax in BC can be as high as 25%, depending on the value.

Car Sales Tax By Province: Private Sales

The Federal GST does not apply when you buy a used vehicle that is being sold privately.

ProvinceFederal Sales TaxProvincial Sales Tax (PST/RST/QST)Total Car Sales Tax
Alberta0%0%0%
British Columbia0%12% – 20%*12% – 20%*
Manitoba0%7%7%
New Brunswick0%15%15%
Newfoundland0%15%15%
Nova Scotia0%15%15%
Ontario0%13%13%
PEI0%15%15%
Québec0%9.975%9.975%
Saskatchewan0%6%**6%**

* The provincial car sales tax on passenger vehicles sold privately in BC ranges between 12% and 20%, depending on the purchase price.
** Used cars purchased privately in Saskatchewan with a purchase price of $5,000 or less are exempt from PST.

Car Sales Tax in Alberta

Along with the territories, Alberta is the only province in Canada that does not charge provincial sales tax on car purchases. You only pay the 5% GST when buying from a dealership and 0% taxes for private sales.

Car Sales Taxes in British Columbia

The provincial sales tax (PST) on used and new cars purchased at the dealership is based on the purchase price of the vehicle:

  • Less than $55,000: 7% PST
  • $55,000 – $55,999.99: 8%
  • $56,000 – $56,999.99: 9%
  • $57,000 – $124,999.99: 10%
  • $125,000 – $149,999.99: 15%
  • $150,000 and over: 20%

A 5% GST also applies.

When buying a car through a private sale or if a vehicle is gifted to you, GST is not paid, but a higher PST applies:

  • $0 – $124,999.99: 12%
  • $125,000 – $149,999.99: 15%
  • $150,000 and over: 20%

Car Sales in Manitoba

If you buy a vehicle privately in Manitoba, 7% RST is collected by an Autopac agent when you register it. The same provincial tax rate applies to vehicles purchased from a dealership (plus 5% GST).

RST is waived in some scenarios, including:

  • Gift from a family member
  • Title transfer through the estate of a deceased person
  • Exempt vehicles, e.g. fire trucks or ambulances
  • A new resident of Manitoba who meets the eligibility requirements.

Car Sales Tax in Nova Scotia

A 15% sales tax (HST) is applied to the value of the vehicle as determined using the Canadian Red Book wholesale listing price, or the purchase price, whichever is higher.

The 15% HST or provincial Vehicle Tax (PVT) is also charged in other Atlantic provinces, i.e. Prince Edward Island, New Brunswick, and Newfoundland and Labrador.

Car Sales Tax in Ontario

Car buyers pay 13% sales tax in Ontario based on the purchase price of the vehicle or its wholesale value (whichever is greater).

For vehicles that are 20 years or older, an appraisal is required to determine their value.

When you gift a vehicle to a close family member, sales tax is not charged.

Car Sales Tax in Quebec

In Quebec, a 9.975% QST applies plus the standard 5% GST.

GST and QST are applied to the purchase price agreed upon with the dealer.

For private used car sales, you don’t pay GST; however, QST is calculated using the estimated value of the vehicle or its sale price (whichever is higher).

Car Sales Taxes in Saskatchewan

Used vehicles that are purchased privately for personal or farm use are exempt from the 6% PST if their value is $5,000 or less.

Vehicles purchased from a dealership are charged 11% (i.e. 6% PST + 5% GST).

Territorial Car Sales Taxes

No territorial sales tax is applied to vehicle purchases in the three territories – Yukon, Nunavut, and Northwest Territories.

If you buy a vehicle from a dealership, the federal 5% GST applies.

How To Calculate Car Sales Tax

You can estimate how much taxes you will pay by using one of the many car sales tax calculators available online.

 A good example is this GST/HST calculator provided by the federal government. You can also calculate car taxes manually.

For example, if the car has a purchase price of $50,000 and you live in Toronto, your car sales tax is: $50,000 x 13% = $6,500

You can also check out this Car Loan Calculator.

What is the Federal Luxury Tax?

The Luxury Tax comes into effect on September 1, 2022, and will apply to new car sales and aircraft with retail sales prices over $100,000, as well as new boats with retail sales prices exceeding $250,000.

The tax will be calculated at 20% of the value above $100,000 (for vehicles) or 10% of the full retail price (whichever is lesser).

For example, if you are buying a car valued at $150,000, the luxury tax is calculated as follows:

  • 20% x $50,000 = $10,000, or
  • 10% x $150,000 = $15,000

$10,000 is the lesser amount, and this is the luxury tax you would pay. This amount is on top of the GST and PST.

FAQs

How do you avoid paying taxes on a used car in BC?

Provincial Sales Tax ranging between 12% and 20% is generally due when you buy a used car in British Columbia, even if it is through a private sale. This tax also applies when you receive a vehicle as a taxable gift.

How does a trade-in affect car taxes?

The value of a trade-in vehicle lowers the purchase price of the new car and the sales tax amount due.

Is there a luxury tax on cars in BC?

Yes, for used cars worth $125,000 or more, the provincial sales tax increases from 12% to as high as 20%.

Related:

Car Sales Tax in Canada 2022: Used, New and Private Car Sales

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Author

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Enoch Omololu

Enoch Omololu is a personal finance expert and a veterinarian. He has a master’s degree in Finance and Investment Management from the University of Aberdeen Business School (Scotland) and has completed several courses and certificates in finance, including the Canadian Securities Course. He also has an MSc. in Agricultural Economics from the University of Manitoba and a Doctor of Veterinary Medicine degree from the University of Ibadan. Enoch has a passion for helping others win with their personal finances and has been writing about money matters for over a decade. He has been featured or quoted in The Globe and Mail, Winnipeg Free Press, Wealthsimple, Financial Post, Toronto Star, CTV News, Canadian Securities Exchange, Credit Canada, National Post, CIBC, and many other personal finance publications.

His top investment tools include Wealthsimple and Questrade. He earns cash back on purchases using KOHO, monitors his credit score for free using Borrowell, and earns interest on savings through EQ Bank.

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