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.
A person that purchases a used road vehicle registered under the Highway Safety Code from an individual who is not registered for the QST must pay the QST to the Société de l'assurance automobile du Québec (SAAQ) when registering the vehicle.
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.
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.
|QST payable ($12,500 x 9.75%)||$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.