1. SkipCarDealer
  2. Glossary
  3. Explain the sales tax on vehicle purchases in ON?
Explain the sales tax on vehicle purchases in ON?
Open Your Account
Car Loan Glossary • on

Explain the sales tax on vehicle purchases in ON?

In Ontario, the standard sales tax on new and used vehicle purchases from a registered dealer is 13% Harmonized Sales Tax (HST). This single tax rate incorporates both the 5% federal Goods and Services Tax (GST) and the 8% provincial sales tax component. However, the tax treatment differs significantly for private sales of used vehicles. When purchasing a used vehicle privately, no HST is collected at the point of sale. Instead, the 13% provincial Retail Sales Tax (RST) is applied when you register the vehicle at ServiceOntario. This tax is calculated on the greater of the declared purchase price or the vehicle's wholesale value, often referred to as the Red Book value, as per provincial regulations. This distinction is crucial for consumers, as it means private sales are not entirely tax-free, and the tax amount can be higher than expected if the declared purchase price is below the assessed wholesale value. Furthermore, any applicable rebates, such as those for electric vehicles, are typically applied before the HST is calculated, reducing the taxable amount. Understanding these nuances is essential for accurate budgeting and avoiding unexpected costs during the vehicle acquisition process in Ontario.

References:

Related Topics: on province taxes

Related Financial Terms

Explain an auto loan APR in Canada?

The Annual Percentage Rate (APR) on an auto loan in Canada represents the true, total annu...
Explain the Bank of Canada policy interest rate used for car loans?

The Bank of Canada's policy interest rate, hypothetically at 2.75% as of July 30, 2025, is...
Do I pay sales tax on a car loan?

In Canada, you do not pay sales tax directly on the interest portion of your car loan. Ins...
Do I pay sales tax on a car loan in Canada?

In Canada, you absolutely pay sales tax when purchasing a vehicle, but it's crucial to und...

Need more help?

Explore our full glossary or get in touch with our financing experts.

View Full Glossary
Search Glossary
Type a keyword and hit enter
Browse by Letter
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Popular Terms

Ready to get approved?

Skip the dealership hassle and get pre-approved for your car loan today.

Apply Now

With over 50 years of experience in the automotive industry, we know what we're doing when it comes to getting the best deals. We specialize in credit building and rebuilding, and with our expertise, we're sure to find a solution that suits you! Its our Skip Car Dealer Guarantee.

Credit Solutions

Loan Types

Programs

Partners

155-2 King Street West, Unit #107, Hamilton, ON, L8P 4S0 888-270-SKIP (7547)

PARTICIPATING LENDERS MAY VERIFY YOUR SOCIAL INSURANCE NUMBER, DRIVER'S LICENSE NUMBER, PROVINCIAL ID, OR ANY OTHER GOV IDENTIFICATIONS AND REVIEW YOUR INFORMATION AGAINST FEDERAL DATABASES TO INCLUDE BUT NOT LIMITED TO EQUIFAX, TRANSUNION, AND EXPERIAN TO DETERMINE CREDIT WORTHINESS, CREDIT STANDING AND/OR CREDIT CAPACITY. BY SUBMITTING YOUR APPLICATION AND INFORMATION ON THIS WEBSITE, YOU AGREE TO ALLOW ANY AND ALL PARTICIPATING LENDERS TO VERIFY YOUR INFORMATION AND CHECK YOUR CREDIT. SKIP CAR DEALER FOLLOWS BEST PRACTICES OF THE CANADIAN FAIR TRADING ACT OF 1999. ALL FINANCE IS SUBJECT TO EMPLOYMENT STATUS AND INCOME. APPLICANTS MUST BE 18 OR OVER, TERMS AND CONDITIONS APPLY, GUARANTEES AND INDEMNITIES MAY BE REQUIRED. WE CAN INTRODUCE YOU TO A NUMBER OF FINANCE PROVIDERS BASED ON YOUR CREDIT RATING. WRITTEN QUOTATION ON REQUEST.

This site uses cookies so that we can provide you with the best user experience. By continuing to use the site you are consenting for cookies to be used. Further information on cookies and how you can disable them is available on our cookie policy.

Copyright © 2020 Skip Car Dealer All Rights Reserved.

Terms of use | Privacy Policy

Top