Specified Vehicles Retail Sales Tax

Retail Sales Tax
Ministry of Finance
November 2013
Specified Vehicles
This publication explains how Retail Sales Tax (RST) applies to specified vehicles purchased
privately in Ontario or brought into Ontario. Please note that this publication replaces
RST Guide 209 - Private Sales of Used Motor Vehicles dated July 2009.
If you require additional information please contact the Ministry of Finance toll free at
1 866 ONT-TAXS (1 866 668-8297) or visit ontario.ca/finance.
For information on the obligation to pay the federal and provincial portions of the Harmonized Sales
Tax (HST), contact the Canada Revenue Agency at 1 800 959-5525 or visit www.cra.gc.ca/gsthst.
Disclaimer
The information contained in this publication is provided only as a guideline for transactions on or
after July 1, 2010 and is not intended to replace the legislation.
Definition of specified vehicle
Specified vehicles include:
•
motor vehicles or other vehicles for which a permit is required under the Highway Traffic Act to
operate on a highway, such as:
o automobiles
o motorcycles and motor scooters
o mopeds
o buses (e.g., school buses)
o trucks and vans
o motorized recreational vehicles (e.g., motor homes)
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o trailers
•
off-road vehicles or motorized snow vehicles that require a permit under the Off-Road Vehicles
Act or the Motorized Snow Vehicles Act
•
boats
•
aircraft
The following are examples of vehicles that are not specified vehicles:
•
street cars
•
rail locomotives and railway rolling-stock
•
bicycles
•
electric bicycles
•
mobile homes
Private purchases of specified vehicles in Ontario
As of July 1, 2010, RST at the rate of 13 per cent is payable by a purchaser on a specified vehicle
purchased from a person who is not a GST/HST registrant, unless an exemption is applicable. RST is
collected at ServiceOntario Centres across Ontario.
RST does not apply to the purchase of a specified vehicle from a GST/HST registrant. For information
on the obligation to pay the federal and provincial portions of the HST, please contact the Canada
Revenue Agency at 1 800 959-5525.
Fair market value
For a specified vehicle purchased privately in Ontario, RST applies to the vehicle’s fair market value.
Automobiles, vans and trucks that have an empty weight of
2,200 kilograms or less
For an automobile, van or truck that has an empty weight of 2,200 kilograms or less, fair market value
generally means the greater of the vehicle’s purchase price or the amount stated in the Canadian
Red Book or the Canadian Older Car/Truck Red Book (Red Book) in respect of the vehicle.
If the Red Book value is less than $1,000, then the fair market value is the purchase price of the
specified vehicle.
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The purchase price includes the value of things exchanged and other consideration accepted by the
seller.
Appraisals for excessively used or severely damaged vehicles
For an excessively used or severely damaged automobile, van, or truck that has an empty weight of
2,200 kilograms or less and a Red Book value of $1,000 or more, the purchaser may have the
specified vehicle appraised before the ownership is transferred. If the purchase price and the
appraised value are both less than the Red Book value because of severe damage to or excessive
use of the specified vehicle, then RST will be collected at a ServiceOntario Centre on the greater of
the purchase price or appraised value.
The appraiser must complete the required information on the Motor Vehicle Appraisal Record form.
The appraised value of the vehicle will only be accepted if the appraisal is done by:
•
a motor vehicle dealer who is licensed under the Motor Vehicle Dealers Act, 2002 and sells, at
retail, an average of at least 25 motor vehicles in a year
•
an independent motor vehicle appraiser who performs appraisals for insurance companies that
are licensed under the Insurance Act and registered with the Ministry of Finance. The
independent motor vehicle appraiser’s number must be recorded on all appraisals.
If a purchaser paid RST on the vehicle’s Red Book value at the time ownership was transferred, but
later obtains an appraisal confirming that the Red Book value is higher than the appraised value, the
purchaser may claim a refund. The amount of the refund will be the difference between the RST paid,
and the RST payable on the greater of the vehicle’s appraised value or its purchase price. To qualify
for the refund, the appraisal must be made within 60 days from the date of purchase.
Antiques
For an automobile, van or truck that has an empty weight of 2,200 kilograms or less that is 20 years
or older at the time of registration, RST is payable on the greater of the following:
•
the purchase price,
•
the replacement value for insurance purposes, or
•
the appraised value.
A copy of the bill of sale and either a copy of the appraisal document or an insurance policy showing
the insured value of the vehicle must be provided to the ServiceOntario Centre at the time of
registration.
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Other specified vehicles
For specified vehicles other than those identified above, fair market value means the purchase price.
Some examples include buses (e.g., school buses), motorcycles, motor homes, off-road vehicles,
snowmobiles, all-terrain vehicles, boats, aircraft, trailers, trucks, vans and automobiles that have an
empty weight greater than 2,200 kilograms.
Vehicles purchased to transport people with physical disabilities
In 2004 legislation was passed to eliminate the former RST rebate program available for vehicles
purchased to transport people with permanent physical disabilities. As a more effective way of
delivering assistance, additional funds were channelled to the Home and Vehicle Modification
Program offered by the Ontario March of Dimes. For information pertaining to current funding, please
visit the March of Dimes website at www.marchofdimes.ca or call 1 877 369-4867.
Specified vehicles brought into Ontario
Specified vehicles (other than boats and aircraft) brought into Ontario from
another province
Generally, when a specified vehicle (other than a boat or an aircraft) is purchased privately in another
Canadian province or territory and brought or delivered into Ontario on or after July 1, 2010, RST at
the rate of 13 per cent applies to the purchase price of the vehicle, except where the HST applies in
connection with bringing the vehicle into Ontario.
Boats and aircraft brought into Ontario from another province
The provincial portion of the HST generally applies to boats and aircraft purchased in another
Canadian province or territory. In circumstances where the provincial portion of the HST does not
apply, RST generally applies to a boat or an aircraft purchased in another Canadian province or
territory and brought or delivered into Ontario on or after July 1, 2010. RST applies at a rate of
13 per cent to the purchase price of the boat or aircraft.
Specified vehicles (including boats and aircraft) purchased from GST/HST
registrants in another province
RST does not generally apply to a specified vehicle, including a boat or aircraft, that is brought or
delivered into Ontario on or after July 1, 2010 where it was purchased from a GST/HST registrant and
GST/HST applied to the purchase.
Specified vehicles brought into Ontario from outside Canada
The RST does not apply when a specified vehicle is brought into Ontario from outside Canada on or
after July 1, 2010, or when delivery is received in Ontario on or after July 1, 2010.
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For information on the obligation to pay the federal and provincial portions of the HST, please contact
the Canada Revenue Agency at 1 800 959-5525.
Trade-ins
For RST purposes, the purchase price includes the value of things exchanged and other
considerations accepted by the seller. In other words, a trade of any nature will not decrease the
value on which RST applies to a specified vehicle.
Exempt transfers of specified vehicles
Specified vehicles may be exempt from RST under the following circumstances, where criteria for
claiming an exemption are met and required documentation is provided to support the exemption
claimed.
Estate bequests
A specified vehicle may be transferred exempt from RST to any beneficiary named in a will. A copy of
the will must be presented at the time the ownership of the vehicle is transferred. If a copy of the will
cannot be presented and the ownership of the vehicle is being transferred to one of the beneficiaries,
a letter from a lawyer or from the courts must be provided by the beneficiary to confirm that he or she
is a beneficiary. If the will or letter cannot be provided, RST must be paid on the vehicle.
Gifts between family members
A specified vehicle may be transferred exempt from RST to a person from a member of his or her
family provided no consideration was given in respect of the transferred vehicle.
A family member means a father, mother, spouse, grandfather, grandmother, son, daughter,
grandson, granddaughter, son-in-law, daughter-in-law, father-in-law, mother-in-law, step-father, stepmother, step-grandfather, step-grandmother, step-son, step-daughter, step-grandson or stepgranddaughter. Effective July 1, 2010, gifts of specified vehicles between siblings are also exempt
from RST.
Only one exempt transfer of the same vehicle, between family members, is allowed within a
12-month period.
If a specified vehicle is given to a qualifying family member, the family members are required to
complete a Sworn Statement for a Family Gift of a Used Vehicle in the Province of Ontario. This form
requires the signature of a Commissioner of Oaths. The completed form is to be provided to the
ServiceOntario Centre at the time the ownership is transferred.
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Marital breakdown
A specified vehicle acquired from a spouse or former spouse as the result of a breakdown in the
relationship is exempt from RST if it is part of a settlement under the Family Law Act. Either a Sworn
Statement for the Transfer of a Used Motor Vehicle in the Province of Ontario, a Separation
Agreement, or a Divorce Agreement must be presented to the ServiceOntario Centre at the time the
ownership is transferred.
Donated vehicles
A specified vehicle may be donated exempt from RST to a qualifying religious, charitable or
benevolent organization if the donor paid the applicable RST on the original purchase. The
organization is required to provide a Sworn Statement for the Transfer of a Used Motor Vehicle in
the Province of Ontario to the ServiceOntario Centre at the time the ownership is transferred stating
that the vehicle is a gift.
A religious, charitable or benevolent organization means any organization defined as a “registered
charity” by the federal government under subsection 248(1) of the Income Tax Act (Canada) and
which holds a charitable registration number issued by the Canada Revenue Agency (CRA).
In addition, a vehicle may be given to an Ontario school, college or university exempt from RST. In
this case, there is no requirement for the donor to have paid the RST previously on the donated
vehicle.
Status Indians, Indian bands and councils of an Indian band
Effective September 1, 2010, Status Indians, Indian bands and councils of an Indian band may
transfer a specified vehicle purchased privately off-reserve exempt from RST. The vehicle is not
required to be registered or delivered to a reserve address in order to qualify for the RST exemption.
The specified vehicle must be for the consumption or use by a Status Indian or exclusively for the
consumption or use of the band or council of the band.
To claim an exemption, Status Indians are required to present their “Certificate of Indian Status”
identity card to the ServiceOntario Centre. Indian bands and councils of an Indian band are required
to present a letter from the band or council certifying the vehicle is exclusively for the consumption or
use of the band or the council of the band. The letter must be on appropriate letterhead, dated and
signed by an authorized member of the band or council. Indian, Indian band and council of an Indian
band have the same meanings as defined in the Indian Act (Canada).
Farm vehicles
Persons engaged in the business of farming may register certain specified vehicles exempt from RST
provided they will be used exclusively in the business of farming and qualify as farm implements,
machinery or equipment. Farmers must present their Farmer ID card at the time ownership is
transferred at a ServiceOntario Centre.
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The following specified vehicles qualify as farm implements, machinery or equipment:
•
all-terrain-vehicles, which are equipped with a carrying platform or rack and have an engine
displacement of 200cc or more
•
licensed and plated trailers specifically designed for transporting livestock or farm crops.
A “person engaged in the business of farming” means a person who undertakes farming with a
reasonable expectation of profit.
Foreign representatives, officials and entities of foreign states
Foreign Affairs, Trade and Development Canada authorizes certain foreign entities and
representatives/officials to receive an exemption from RST on private purchases of specified vehicles.
Please refer to Retail Sales Tax Exemption for Foreign Entities, Representatives and Officials
for details about eligibility and how to claim the exemption.
Settler’s effects
Individuals that are “settlers” may bring a specified vehicle into Ontario exempt from RST. Individuals
are considered “settlers” if:
•
the individual was a resident outside of Ontario for at least one year before taking up residence
in Ontario (individuals who keep their Ontario residence during a temporary absence, i.e., less
than one year, do not qualify), and
•
the individual has entered Ontario with the intention of establishing or re-establishing a
residence for a period longer than one year.
Eligible individuals may bring their specified vehicle(s) into Ontario exempt from RST if they are:
•
owned by them for at least 30 days immediately before taking up residence in Ontario, and
•
the vehicle is brought into Ontario for use and consumption in Ontario within six months of the
individual taking up residence in Ontario
Individuals that are settlers, moving from another Canadian province or territory, must have paid all
applicable taxes owing to their former province or territory in order to claim the Ontario exemption.
The exemption is not available if the taxes owing to the other jurisdiction have been refunded or are
refundable. Proof that the vehicle was previously licensed in another province, territory, or country
(e.g., registration/ownership document) must also be provided.
Military personnel may qualify for this exemption if all the above conditions are met.
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Other exempt transfers
An RST exemption may also be available in other circumstances, including the transfer of a specified
vehicle:
•
on which RST was previously paid, between related persons including corporations,
individuals, and partnerships. A completed Sworn Statement for the Transfer of a Used
Motor Vehicle in the Province of Ontario form and Addendum to Sworn Statement When
Claiming an Exempt Transfer of Used Motor Vehicles Between Corporations, or
Corporation and Shareholder form must be provided to the Service Ontario Centre.
•
for insurance, financing or security purposes if the transferor retains possession of the vehicle
and the transferee completes a Sworn Statement for the Transfer of a Used Motor Vehicle
in the Province of Ontario indicating that the transferor is retaining ownership/possession
and use of the vehicle
•
for repossession purposes by a financial institution or individual. Individuals require an
authorization letter from the Ministry of Finance to transfer the vehicle without the payment of
tax.
•
for wrecking purposes. Transferors must hold a class C license issued by the Ministry of
Transportation and the vehicle must be transferred to a “WRK” status.
•
between a carrier and another person such as a broker driver. A copy of the bill of sale
showing that the owner paid the applicable RST and a letter entitled “Transfer of Vehicle
Registration Pursuant to the Highway Traffic Act” from the carrier must be provided to the
ServiceOntario Centre. If any of these documents cannot be provided, a Sworn Statement for
the Transfer of a Used Motor Vehicle in the Province of Ontario must be provided.
•
used as a taxi between its registered owner and the holder of a taxi licence issued by the
municipality. A completed copy of the “Motor Vehicle Leasing Agreement” or other similar
agreement between the owner of the taxi license and the registered owner of the vehicle must
be provided to the ServiceOntario Centre.
•
a fire fighting vehicle purchased for more than $1,000 for the exclusive use of a municipality,
university, public hospital, local services board or volunteer group.
Exemptions applicable only to boats and aircraft
In addition to the above listed exemptions, which are available for specified vehicles generally,
specific exemptions are available for boats and aircraft.
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Boats over 1,400 cubic metres are exempt. Boats, 1,400 cubic metres or less, that are operated for
commercial purposes are also exempt. Commercial purposes include:
•
use exclusively for regularly-scheduled public transportation services,
•
the transportation of goods, and
•
the operation of a tugboat,
but do not include:
•
the operation of boats for tourists,
•
the operation of boats for charter or tour services that may or may not make scheduled stops
incidental to the service,
•
the ferrying of pilots or work crews, or
•
the operation of vessels for sporting, entertaining or recreational purposes.
A person engaged in the business of fishing may purchase a boat of 1,400 cubic metres or less used
solely for commercial fishing purposes exempt from RST. A “person engaged in the business of
fishing” means a person who undertakes fishing with a reasonable expectation of profit.
Firefighting boats/vessels that are designed and equipped at the time of purchase for fire fighting also
qualify for an exemption.
Commercial aircraft are exempt, provided they are for the use of the general public and not primarily
reserved for a particular person and operated or available for operation for hire or reward. State
aircraft used exclusively in the service of Her Majesty in right of Canada or in right of a province
(e.g., an aircraft acquired for emergency services) are also exempt.
How to pay the tax
For specified vehicles other than boats and aircraft, the applicable RST is payable at the time the
vehicle is registered at the ServiceOntario Centre.
For boats and aircraft, the applicable RST is payable directly to the Ministry of Finance. A cheque or
money order should be made payable to the Minister of Finance with a copy of the bill of sale and
mailed to:
Ministry of Finance
33 King St W, PO Box 623
Oshawa ON L1H 8H7
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Alternatively, RST on boats may be paid at certain ServiceOntario Centres which can be found using
the ServiceOntario Service Location Finder at ontario.ca/findservices.
To ensure that RST has been paid on all taxable boats and aircraft, the Ministry of Finance routinely
reviews the records of Transport Canada. Therefore, when a boat or aircraft is registered, the
purchaser may be contacted by the ministry to confirm that applicable RST was paid.
It is important to ensure that RST is paid (when applicable) as non-compliance may result in penalties
and interest.
Refunds and rebates
Refund for tax paid in error
A refund of RST may be claimed on the purchase of a specified vehicle where RST was paid in error.
Claimants may use the following form:
•
An Application for a Refund of Ontario Retail Sales Tax for Used Vehicles Purchased
Privately form must be completed where:
o a vehicle has a reduced value due to excessive use or severe damage and a qualifying
appraisal is provided,
o an exemption is applicable and the required documentation was not provided to the
ServiceOntario Centre at the time of registration.
Rebate for specified vehicles permanently removed from Ontario
A person who purchases a specified vehicle in Ontario and then subsequently removes the vehicle
from the province for permanent use outside of Ontario may apply for a rebate of the RST that was
paid by completing an Application for a Refund of Ontario Retail Sales Tax for Used Vehicles
Purchased Privately form. To qualify for the rebate, all the following conditions must be met:
•
the vehicle is permanently removed from Ontario within 30 days of purchase
•
the RST paid on the invoice is $50 or more
•
residents of other Canadian provinces are required to pay the applicable sales tax to their
home province on the vehicle being claimed and provide proof of payment of tax. If the vehicle
is purchased for use in a jurisdiction where sales tax is not payable, a copy of the bill of lading
or customs documents must be provided as proof of removal.
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How to apply for a refund or rebate
Refund applications can be found on the ministry’s website, ontario.ca/finance.
Completed application forms together with supporting documentation should be mailed to the Ministry
of Finance Tax Office indicated on the form.
Refund and rebate claims must be received by the ministry within four years from the date the RST
was paid.
Request for written interpretations
To obtain a written interpretation on a specific situation not addressed in this publication, please send
your request in writing to:
Ministry of Finance
Advisory Services, Retail Sales Tax
33 King Street West, 3rd Floor
Oshawa ON L1H 8H5
For more information
Visit ontario.ca/finance or contact the Ministry of Finance at 1 866 ONT-TAXS (1 866 668-8297) or
1 800 263-7776 for teletypewriter (TTY).
Cette publication est disponible en français sous le titre « Véhicules déterminés - Taxe de vente au détail ». Vous pouvez
en obtenir un exemplaire en appelant le 1 866 ONT-TAXS (1 866-6688297) ou en visitant ontario.ca/finances.
ISBN: 978-1-4606-2226-1 (Print)
ISBN: 978-1-4606-2224-7 (PDF)
© Queen’s Printer for Ontario, 2013
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