HST/GST on Car Purchases in Canada 2025

Taxes on car purchases in Canada vary significantly by province and by whether you buy from a dealer or a private seller. In Ontario, the tax rate differs entirely between the two. Knowing how taxes work before you buy can save you from an unpleasant surprise at the MTO or dealership.

Provincial Car Tax Rates — Dealer Purchases (2025)

Province	Tax Rate	Tax Type	Tax on $40,000 car
Ontario	13%	HST	$5,200
British Columbia	12%	5% GST + 7% PST	$4,800
Alberta	5%	GST only	$2,000
Quebec	14.975%	5% GST + 9.975% QST	$5,990
Manitoba	12%	5% GST + 7% PST	$4,800
Saskatchewan	11%	5% GST + 6% PST	$4,400
Nova Scotia	15%	HST	$6,000
New Brunswick	15%	HST	$6,000
Newfoundland	15%	HST	$6,000
PEI	15%	HST	$6,000

Ontario Private Sale: RST (Not HST)

This is one of the most commonly misunderstood aspects of car buying in Ontario. When you buy a vehicle from a private seller (not a dealership) in Ontario:

You do NOT pay HST (13%) on the transaction
You pay 8% Retail Sales Tax (RST) to the Ministry of Transportation when you register the vehicle
The RST is calculated on the higher of: (a) the actual sale price, or (b) the wholesale book value as determined by the MTO

Example: You buy a used Honda Civic for $12,000 from a private seller. The MTO book value is $14,000. You pay RST on $14,000 = $1,120 in RST. You cannot pay just 8% of $12,000 if the book value is higher.

BC Private Sale: PST Still Applies

In BC, buying from a private seller does not exempt you from PST. You still pay 12% PST when registering the vehicle with ICBC. The PST is calculated on the higher of the sale price or the Canadian Black Book value — similar to Ontario's RST calculation.

Alberta: No PST — Tax Advantage for Buyers

Alberta is the only Canadian province with no provincial sales tax (no PST). Car buyers in Alberta pay only the 5% federal GST, making Alberta the most tax-advantaged province for vehicle purchases. On a $50,000 vehicle, Alberta buyers pay $2,500 in tax vs $6,500 in Ontario — a $4,000 difference.

Luxury Vehicle Surtax (Federal)

Canada introduced a federal Luxury Tax on vehicles in 2022, applying to vehicles over $100,000 MSRP. The tax is the lesser of 10% of the full value or 20% of the value above $100,000. For most Canadians this is not relevant, but it's worth knowing if you're in the market for a high-end vehicle.

EV Tax Considerations

EV rebates (iZEV) are applied before taxes in most cases, meaning you pay tax on the reduced price. For example, if an EV costs $50,000 and qualifies for a $5,000 federal rebate, you pay HST/GST on $45,000 — saving $650 in Ontario tax vs paying on the full $50,000.

Taxes on Trade-Ins

In most provinces, when you trade in a vehicle at a dealership, your trade-in value is deducted from the purchase price before tax is calculated. This is the trade-in tax advantage:

Buying a $40,000 car and trading in a $100 car: you pay tax on $30,000, not $40,000
In Ontario: HST on $30,000 = $3,900 (instead of $5,200 on the full $40,000) — saving $1,300

This trade-in tax credit is a meaningful financial advantage of trading in at a dealer vs selling privately — even if the dealer's trade-in offer is lower than the private market value.

Summary: Tax You Should Expect to Pay

Transaction Type	Ontario	BC	Alberta
Dealer purchase	13% HST	12% (5%GST+7%PST)	5% GST
Private sale	8% RST (to MTO)	12% PST (to ICBC)	5% GST
Trade-in (at dealer)	Tax on net price	Tax on net price	Tax on net price

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Last updated: March 2025. Tax rules vary and are subject to change. Always verify current rates with your provincial government before purchasing.