Purchase of a Used Road Vehicle from a Dealer
Calculating and paying the GST
If you purchase a used road vehicle from a retail dealer, you must pay the GST to the dealer. As a rule, the GST is calculated on the sale price agreed upon with the dealer.
Calculating and paying the QST
If you purchase a used road vehicle registered under the Highway Safety Code, you must pay the QST calculated on the sale price agreed upon with the dealer. However, the QST is calculated on the estimated value of the vehicle if the estimated value is greater than the sale price agreed upon with the dealer, unless the vehicle is damaged or has been subjected to unusual wear. In this case, see “Used road vehicles with damage or unusual wear” below.
A dealer registered for the GST and QST sells a used motor vehicle to an individual for $13,000. No vehicle is accepted as a trade-in. The average wholesale price 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 × 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 two amounts:
- the agreed sale price;
- the estimated value of the vehicle.
In this example, the agreed sale price ($13,000) is greater.
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 sale under the QST system. The same is true of a vehicle acquired by 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.
The dealer must collect the QST on road vehicles other than motor vehicles.
The dealer must calculate the QST on motor vehicles; however, the tax is normally collected by the Société de l'assurance automobile du Québec (SAAQ) at the time of registration. The dealer must provide the purchaser with a sales contract or other document clearly showing the amount of QST payable to the SAAQ, as well as other information, including:
- the sale price;
- the amount on which QST was calculated (taking the estimated value into account, if applicable);
- the amount of GST charged;
- the trade-in amount, if applicable;
- the delivery date.
Purchaser's obligations
If, as the purchaser of a motor vehicle, you paid the QST to the vendor in error, you still have to pay the QST to the SAAQ when registering. Moreover, Revenu Québec will not refund you the QST paid to the vendor.
To recover the QST paid in error (as an ITR or in another manner), you must deal directly with the vendor. Neither Revenu Québec nor the SAAQ will refund QST wrongly paid to the vendor.
Certain dealers act as the purchaser's mandatary for the purpose of registering a vehicle and paying the QST to the SAAQ. If your dealer provides these services, you can pay the registration fee and the QST to the dealer. However, should the dealer fail to remit these amounts to the SAAQ, you will have to pay the amounts again directly to the SAAQ.
Used road vehicles with damage or unusual wear
If you purchase a used road vehicle for less than its estimated value because it is damaged or has been subjected to unusual wear, the QST may be calculated on the lower price as long as you provide the dealer, at the time of the transaction, with 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. A copy of the evaluation report must also be given to the SAAQ when the vehicle is registered.
If you pay the QST on the estimated value of the vehicle, you may claim a rebate of the QST overpaid by submitting the evaluation report to Revenu Québec within the prescribed period of time. The evaluation report must be made within a reasonable amount of time (considered to be about 10 working days after the date of the transaction). A longer amount of time may be acceptable if you can explain why you were unable to obtain the evaluation report at an earlier date and can provide proof that the vehicle was not damaged after the purchase date. You must make the claim using form VD-60.R-V, Application for a QST Rebate for a Road Vehicle.
Property and services acquired with a motor vehicle
If the price of property or services sold along with a motor vehicle is listed separately on the sales contract, you must pay the QST applicable to the property or service to the dealer. 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.
Road vehicle equipped with new tires
If you purchase a road vehicle equipped with new tires, you must pay the specific duty on new tires.
As a rule, the GST and QST apply to the specific duty on new tires.
The GST does not apply if:
- the vendor is a small supplier that is not registered for the GST; or
- the sale of the road vehicle or tires, or the lease of the road vehicle, is zero-rated under the GST system.
The QST does not apply if the sale of the road vehicle or tires, or the lease of the road vehicle, is zero-rated under the QST system.
Accommodation sales of road vehicles
If you purchase a road vehicle from a dealer and you asks the dealer to act as an intermediary in the sale of your old vehicle to a third party, the sale is known as an "accommodation sale.” See Accommodation Sales of Road Vehicles for details on how to calculate the taxes in this situation.