Every single car driven on Ontario roads should have registered ownership. Taxes apply when individuals participate in selling, exchanging, or gifting a vehicle. When transferring ownership of a car, people should be mindful of the information provided.
When transferring title to a vehicle, the previous and new titleholders must follow a certain number of rules as per the regulations of the province where they reside. In most of the other regions of Canada, registry agents manage registration, whereas, in Ontario, handovers are executed at the Service Ontario center.
People participating in this are obligated to make an appearance and provide Driver’s licenses (or any form of official ID with a picture) to comply with the registration. Individual acquiring title to the vehicle is required to pay the fee for registration. For Ontario, supplementary documents are required, for instance, Safety Certification, Emissions test, a certification of vehicle ownership, and a statement of plate transfer to transfer number plates.
In Ontario, the good news is ownership can be transferable shorn of paying the retail sales tax! The calculation differs concerning the relationship between individuals and the nature of the transaction.
What is vehicle ownership?
Automobile ownership; a green document that validates your purchase of the vehicle. The ownership de construes vehicle information (VIN), license plate, and owner’s information. In records law enforcement to authenticate information when necessary. Insurance companies also keep this information to check claims made by the owner in case of damage. Hence, it is essential to ensure these documents are UpToDate.
How to calculate sales tax on a used car
A misunderstanding related to buying a secondhand car is that individuals do not have to pay tax on their purchases. Imagine the individual who decided to buy the vehicle registered privately, pays the said price with tax exemption.
Since the seller is a non-tax registrar– the dealership claims it as part of business taxes – they are not obligated to get the tax. However, once the vehicle is registered, the provincial government gathers the tax on the sale.
It differs by province, with Ontario exempt from any tax on private sales, while other regions collect some vehicle sales tax.
When buying a vehicle, an individual must submit:
- Fill out Used Vehicle information package
- Submit vehicle certification
- During the first six days, submit UVIP and vehicle certification to Service Ontario
- present car insurance
- Adhere to the tax obligation and show proof of sales tax paid
- Pay fee for plate sticker and license plate
When selling, an individual must:
- At service Ontario Obtain the UVIP
- Fill out Used Vehicle information package
- Sign vehicle certification
- Get rid of license plates and the plate section of your authorization
On paper, the vehicle stays in the seller’s possession legally till all the paperwork is not submitted by the buyer to service Ontario.
How to gift a car in Ontario
Usually, gifting a vehicle in Ontario or other parts of Canada is either a car’s purchase or sale. And individuals are obligated to pay a tax equal to the appraised wholesale price of the vehicle or the sale price, whatever is greater.
However, this rule is not applied to people from the same family. If a vehicle is being transferred to a family member, the tax calculation is based on the sale price. The Ministry of Finance-Ontario considers partners, blood relations, and adoption cases family.
Documents that need to be submitted at Service Ontario Centre when gifting a car:
- Sworn Declaration Form– The current owner and purchaser fill this form in the physical presence of a commissioner at the Ministry of Transportation Ontario.
- Car insurance document-before registering at the Ministry of Transportation, new Drivers should ensure insurance is activated. Surex is an excellent company to guide through the process.
- Driver’s license
- Automobile Ownership permit
- Safety credential- this should be obtained from an officially licensed garage, however, in transfer cases between spouses. However, this step can be omitted when the transfer is among spouses.
- Plate transfer credential-this form should also be presented to MTO.
Even though the same documentation is required when gifting a car to a friend in Ontario, you are not exempted from sales tax relief.
Buying via Dealership
In this case, the dealership does all the paperwork on behalf of the owner. However, the paperwork remains the same.
Gifting a vehicle in Ontario
- Evidence of ownership
- Former Vehicle Registration
- Proof of legal Ontario insurance-the pink card
- Acceptable ID by the Ontario Government
Approximate price calculation of a vehicle
Each province has a set of determinants to assess the vehicle’s worth when a transfer takes place. Determinants differ from case to case, from one mode to transport to another and from a seller to seller.
Insurance of a gifted car
Insurance of a gifted vehicle is done when an individual gets a new car. The individual has around two weeks from owning the car to getting it insured. The previous owner is not mandated to arrange or check through the insurance company prior to gifting the car—the recipient must ensure all such formalities from their end within the two-week time frame.
It is mandatory to submit evidence for insurance in Ontario when selling, buying, or driving a vehicle, as you must have noticed how it’s an essential requirement. If you want to get the best understanding or deal, you might want to speak with Surex.