Purchase of a Used Road Vehicle from a Dealer
Calculating the GST
A person that purchases a used road vehicle from a retail dealer must pay the GST to the dealer. As a rule, the GST is calculated on the sale price agreed upon by the two parties.
Calculating the QST
A person that purchases a used road vehicle registered under the Highway Safety Code must, at the time of sale, pay the QST calculated on the estimated value of the vehicle if the estimated value is greater than the sale price agreed upon by the two parties. In this case, see “Sale price lower than estimated value” below to find out how to calculate the QST.
Collecting the QST
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.
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, the purchaser 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.
See the information below concerning the payment of the GST and QST on the purchase of a road vehicle equipped with new tires.
Note that the dealer collects the QST on the sale of road vehicles other than motor vehicles (for example, trailers [including travel trailers], motorcycles and all-terrain vehicles).
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 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.
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 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|
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.
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, 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.
Sale price lower than the estimated value
If a used road vehicle is purchased from a dealer 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 the purchaser, at the time of the transaction, provides the dealer 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. The dealer must keep the report in case there is an audit at a later date.
If the purchaser pays the QST on the estimated value of the vehicle, he or she may claim a rebate of the QST overpaid by submitting a rebate application and the evaluation report (dated within 10 working days after the date of the transaction) to Revenu Québec within the prescribed deadline. The evaluation report can be dated more than 10 working days after the date of the transaction if the purchaser can provide a reasonable explanation as to why he or she was unable to comply with the deadline and proof that the vehicle was not damaged following the purchase. The purchaser must make the claim using form VD-60.R-V, Application for a QST Rebate for a Road Vehicle.
Road vehicle equipped with new tires
A person that purchases a vehicle equipped with new tires 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 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
Where a person purchases a road vehicle from a dealer and asks the dealer to act as an intermediary in the sale of the 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.