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What is the sales tax on vehicle purchases in AB?
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Car Loan Glossary • ab

What is the sales tax on vehicle purchases in AB?

In Alberta, vehicle purchases are subject solely to the federal Goods and Services Tax (GST), which is currently set at 5%. Unlike most other Canadian provinces that levy an additional Provincial Sales Tax (PST) or a combined Harmonized Sales Tax (HST), Alberta does not have a provincial sales tax component on vehicles. This 5% GST applies uniformly to both new and used vehicle transactions. The tax is calculated on the agreed-upon purchase price of the vehicle, typically before any trade-in value is applied, but after any manufacturer rebates that reduce the taxable price. For consumers, this significantly impacts the total cost of a vehicle, making Alberta an attractive market due to its lower overall tax burden compared to provinces where HST can range from 13% to 15% or where PST is applied on top of GST. Understanding this 5% GST is vital for accurate financial planning, as it directly affects the total amount to be financed, your monthly payments, and your overall budget for vehicle ownership. It's crucial for buyers to factor this into their financial calculations to avoid surprises and ensure a clear understanding of the true cost of their vehicle purchase.

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