Purchase of a Used Road Vehicle from an Individual
The GST does not apply on the purchase of a used road vehicle from an individual who is not registered for the GST.
Calculating and paying the QST
If you purchase a used road vehicle registered under the Highway Safety Code from an individual who is not registered for the QST, you must pay the QST to the Société de l'assurance automobile du Québec (SAAQ) when the vehicle's registration is transferred.
The QST is calculated on the higher of the following two amounts:
- the estimated value of the vehicle;
- the sale price of the vehicle.
When a used road vehicle is transferred between related individuals for a price that is lower than the estimated value (transaction with or without consideration), the QST is calculated on the sale price agreed upon by the parties.
The same goes for a used road vehicle brought into Québec following its transfer, outside Québec, between related individuals. In this case, the vehicle's estimated value is not considered in the QST calculation.
Example of the calculation for an individual not registered for the GST and QST who sells a used vehicle to another individual
An individual sells a used vehicle to another individual for $10,000. The average wholesale price of the vehicle is $13,000 from which $500 is subtracted, giving an estimated value of $12,500. Neither individual is engaged in commercial activities.
| Sale price | $10,000.00 |
|---|---|
| Estimated value of the vehicle | $12,500.00 |
| QST payable ($12,500 x 9.975%) | $1,246.88 |
The GST does not apply in this case because the sale involves two individuals making a non-commercial transaction. The QST applies, however, and must be calculated by the SAAQ on the estimated value since it is greater than the sale price. The vendor, a non-registrant, is not required to calculate the amount of QST payable by the buyer.