Are you an Ontario used car dealer (selling vehicles outside of Ontario)?

With the adoption of the internet, dealerships are increasingly selling vehicles to individuals residing in other provinces. On occasion, buyers will travel to Ontario to purchase the vehicle and subsequently transport it back home. Alternatively, a vehicle may be sold without the purchaser and seller ever meeting in person, with the bill of sale being signed by email or fax, and the vehicle being shipped to the out-of-province buyer. It’s important to note that the process to transfer the vehicle's registration will vary depending on the circumstances surrounding the sale.

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What to do if (the purchaser drives the vehicle home)?

If the buyer wishes to drive the vehicle back home, the dealer must obtain a Special Permit, which will only be issued upon verification of the purchaser's insurance. This permit must be displayed on the vehicle's windshield, and the vehicle registration permit must be signed on the back by both the dealer and the customer. This allows the purchaser to legally drive the vehicle back to their home province. After the issuance of the Special Permit, the purchaser has ten days to register the vehicle in their home province.

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What to do if (the vehicle is shipped out-of-Province)?

If the purchaser does not intend to come to Ontario, it may not be feasible to transfer the vehicle's ownership into their name in Ontario. Under such circumstances, the Ontario vehicle registration permit should be signed by the seller and forwarded to the purchaser along with the vehicle, allowing the buyer to register the vehicle in their own province. The vehicle's registration status in Ontario should then be updated to "SOLD" status at the license office.

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Rules for sales to out of Province purchasers: 

In simple terms, the following rules apply for tax charges on vehicle sales:

1. If the delivery takes place in Ontario, a 13% HST will be applicable to the sale, regardless of the buyer's residence.
2. If the delivery takes place outside of Ontario, the applicable tax of the respective province should be charged.
3. The place where the customer takes possession of the vehicle is considered to be the point of delivery.
4. If the customer picks up the vehicle in Ontario and drives it home, the delivery is deemed to have occurred in Ontario.
5. If the vehicle is shipped out-of-province with the buyer as the consignor on the bill of lading, the delivery is deemed to have occurred in Ontario. It is irrelevant who pays for the shipping invoice.
6. However, if the vehicle is shipped out-of-province with the selling dealer listed as the consignor on the bill of lading, the delivery is deemed to have occurred in the destination province. It is again irrelevant who pays for the shipping invoice.
7. Different Canadian jurisdictions have different federal tax rates from Ontario. For more information on GST and HST rates in all Canadian jurisdictions, please refer to the following summary.

Nova Scotia 15%
Prince Edward Island 15%
New Brunswick 15%
Newfoundland 15%
Ontario 13%
Alberta 5%
British Columbia 5%
Manitoba 5%
North West Territories 5%
Nunavut 5%
Quebec 5%
Saskatchewan 5%
Yukon 5%

Sales tax rates by Province link below:
https://www.retailcouncil.org/resources/quick-facts/sales-tax-rates-by-province/

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Buyers from non-HST provinces or territories who purchase a vehicle out-of-province may apply for a refund of the 8% provincial portion of the HST paid in Ontario from the Canada Revenue Agency. To be eligible for the refund, the buyer must have registered the vehicle in their home province and paid any applicable provincial taxes.

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Rebate Application (link)

In order to receive a refund of the 8% provincial portion of the HST paid in Ontario, out-of-province purchasers from non-HST provinces or territories must submit a rebate application to the Canada Revenue Agency. This rebate can be claimed once the purchaser has registered the vehicle in their home province and paid any applicable provincial taxes.

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Note:

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‍Warning:

Please note that this article has been provided for informational purposes only and is not intended to replace or supersede any official regulations or guidelines. While we have made every effort to ensure the accuracy and completeness of the information provided, we strongly recommend that readers verify all details and requirements with their local governing body for used car dealerships, such as the UCDA, AMVIC, or other relevant authorities. Any reliance placed on the information in this article is strictly at the reader's own risk.

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The majority of this information was sourced from the UCDA Mar 13th, 2023
https://www.ucda.org/selling-out-of-province/

For more information, copy and paste this address into a new browser: www.cra.gc.ca/gsthst or call 1-800-959-5525

OR, click the link below:
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/charge-collect-which-rate.html 

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https://www.ucda.org/selling-out-of-province/

www.cra.gc.ca/gsthst

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