Sale of a Used Road Vehicle

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Collecting and calculating the GST

If you sell a used road vehicle at retail, you must collect the GST. As a rule, the GST is calculated on the agreed sale price.

Collecting and calculating the QST

If you sell a used road vehicle at retail, other than a motor vehicle, registered under the Highway Safety Code, you must also collect the QST. The QST is calculated on the agreed sale price. However, the QST is calculated on the vehicle's estimated value if it is greater than the agreed sale price, unless the vehicle is damaged or shows unusual wear. See Used motor vehicle with damage or unusual wear below.

Example of the calculation for a dealer who sells a used motor vehicle to an individual

A dealer registered for the GST and QST sells a used road vehicle for $13,000 to an individual. No vehicle is accepted as a trade-in. The estimated value of the vehicle is $11,500, that is, the average wholesale price (AWP) of the vehicle minus $500 ($12,000 – $500).

Agreed sale price $13,000.00
GST ($13,000 × 5%) + $650.00
QST ($13,000 × 9,975%) + $1,296.75
Total payable $14,946.75

The QST is calculated on the greater of the following amounts:

  • the agreed sale price;
  • the estimated value of the vehicle.

In this example, the agreed sale price ($13,000) is greater.

Sale of a motor vehicle

If you sell a motor vehicle, you must calculate the QST. However, the QST is usually collected by the Société de l'assurance automobile du Québec (SAAQ) at the time of registration.

Note

The sale of a motor vehicle to a person who acquires it solely for resale, or for lease for a period of at least one year, is considered to be a zero-rated supply under the QST system. The same is true of a vehicle sold to a recycler for purposes such as the resale of automotive parts. Note that such sales are zero-rated only if the purchaser is a QST registrant.

Vendor obligations

You must calculate the QST payable by the purchaser of the motor vehicle and provide the purchaser with a sales contract or other document clearly showing the amount of QST payable to the SAAQ, as well as the other required information, including:

  • the sale price;
  • the amount used to calculate the QST (based on the estimated value, if applicable);
  • the amount of GST charged;
  • the trade-in amount, if applicable;
  • the delivery date.

If you fail to correctly indicate the QST payable by the purchaser, you will be liable for any QST amount that is not collected by the SAAQ, in addition to a penalty corresponding to 15% of the amount in question. Moreover, if you collect the QST in error, you must refund the amount to the purchaser.

Used road vehicles with damage or unusual wear

If you sell a used road vehicle for less than its estimated value because it is damaged or has been subjected to unusual wear, the purchaser can pay the QST on the lower price provided, the purchaser gives you, at the time of the transaction, an evaluation report prepared by an appraiser who holds a certificate of professional qualification as an automobile damage appraiser issued by the Groupement des assureurs automobiles. The report must have been prepared by the appraiser in the normal exercise of his or her profession at a certified appraisal centre or at an establishment certified by the Groupement des assureurs automobiles.

You must keep the report in case of an audit. A copy of the evaluation report must also be given to the SAAQ when the vehicle is registered.

Property and services sold with a motor vehicle

If the price of certain property and services sold along with the motor vehicle sold at retail is listed separately on the sales contract, you must collect the QST on the property and services. Examples of such property and services include:

  • extended warranty or coverage;
  • paint sealer;
  • rust-proofing treatment;
  • anti-theft marking;
  • upholstery protection;
  • remote starter;
  • electronic starter lock;
  • anti-theft system.

However, do not include the QST collected on the property and services on the Attestation de transaction avec un commerçant form of the SAAQ.

Example of the calculation for a dealer who sells a used motor vehicle to an individual

A dealer registered for the GST and QST sells a used motor vehicle for $13,000 to an individual. No vehicle is accepted as a trade-in. The average wholesale price (AWP) of the vehicle is $12,000, from which $500 is subtracted, giving an estimated value of $11,500.

Agreed sale price $13,000.00
GST ($13,000 x 5%) + $650.00
QST ($13,000 x 9.975%) + $1,296.75
Total payable $14,946.75

The QST is calculated on the greater of the following amounts:

  • the agreed sale price;
  • the estimated value of the vehicle.

In this example, the agreed sale price ($13,000) is greater.

For motor vehicles, the QST is calculated by the dealer and must be paid to the SAAQ by the purchaser when the vehicle is registered.

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