How tax on a used car works in Ontario
When you buy from another person privately, you pay 13% retail sales tax (RST) when you register the vehicle in your name at ServiceOntario. The important part is what that 13% applies to: the greater of the purchase price or the vehicle’s wholesale value. Ontario uses a standard valuation (the Canadian Red Book) to set that wholesale figure, so a below-book bargain is still taxed on book value.
A worked example
Say the UVIP lists a wholesale value of $12,000 and you negotiate the car down to $10,000. Tax is charged on the higher number — $12,000 — so you’d pay 13% of $12,000 = $1,560, not 13% of your $10,000 price. Your all-in cost is $11,560. Flip it around: if you paid $14,000 for that same car, tax would be on your $14,000 price instead.
Private sale vs. buying from a dealer
From a registered dealer, tax works the ordinary way — 13% HST on the actual selling price, and the dealer handles it. That’s a real difference: privately you’re taxed on wholesale value, at a dealer you’re taxed on price. It’s one reason a private deal isn’t always as much cheaper as the sticker gap suggests once tax is in the math.
The two main exemptions
Family gifts. A vehicle transferred as a gift between certain close family members can be exempt with a sworn statement. Appraisals. For a genuinely rough or high-mileage car worth less than book, a signed appraisal can lower the value tax is based on. Both have specific requirements — confirm before you count on them.
Want the full breakdown, including how it interacts with the UVIP and registration? Read the complete HST guide.