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Explain the sales tax on vehicle purchases in BC?
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Car Loan Glossary • bc

Explain the sales tax on vehicle purchases in BC?

In British Columbia, vehicle purchases are subject to two primary sales taxes: the federal Goods and Services Tax (GST) and the provincial Sales Tax (PST). The federal GST is a flat 5% on the purchase price, while the provincial PST starts at 7%, resulting in a minimum combined sales tax of 12% on most transactions. For new vehicles purchased from a licensed dealership, both GST and PST are collected at the point of sale. For used vehicles, PST is applied to the purchase price, whether acquired from a dealership or a private seller, and is typically collected by ICBC during the vehicle registration process. A significant provincial nuance is that BC PST on vehicles operates on a progressive sliding scale, with the rate increasing for higher-value vehicles, potentially reaching up to 20% for luxury vehicles exceeding specific price thresholds. This tax structure profoundly impacts the total cost of a vehicle, making it crucial for consumers to meticulously factor in these taxes when budgeting, as they can add thousands of dollars to the final purchase price. Consumers should also investigate potential exemptions or rebates, particularly those available for eligible zero-emission vehicles, as these can further impact the final cost.

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