British Columbia Used Vehicle Tax:  Luxury Tax & Used Car Sales Tax in BC

We understand the struggle of trying to understand the British Columbia car sales tax. Most of the time, it feels like a lot of numbers, where most people try to help but fail to provide any guidance on the topic of car tax British Columbia! Trying to work your way through British Columbia car tax and car loan rates british Columbia can feel like an unsolved puzzle, where you are trying to piece everything together with no hope!

So, what is the British Columbia tax on used vehicles? Is there any way to understand the tax on used vehicles in British Columbia for a car loan British Columbia? Lucky for you, because we have simplified British Columbia tax on vehicles to help you find the answers to what tax is paid on used cars in BC and British Columbia luxury car tax!

What is the Used Car Sales Tax in BC?

In British Columbia, the type of car sales tax levied on vehicles depends on the type of vehicle you purchase, the purchase price of the new or used vehicle, and is based on whether you purchase a vehicle from private sellers or auto dealerships.

Usually, you need to deal with three types of taxes during the purchase of a vehicle. They are: GST (Goods and Services Tax), PST (Provincial Sales Tax), and HST (Harmonized Sales Tax). In BC, you won't be paying for HST because it isn't applicable to the province. 

If you are buying a used vehicle from British Columbia car dealerships, then you need to pay GST and PST, with GST at 5% and PST at 7%. With both combined, you will need to pay 12% tax.

Meanwhile, if you buy a car from a private seller, then you need to pay only the PST, where the rate will depend on the vehicle's fair market value.

Recommended: Essential Tips for Buying A Used Car in British Columbia

Do you need to pay PST and GST for a Used Vehicle in BC?

Yes, you need to pay tax after you buy a used car in BC, after you register the vehicle at ICBC(Insurance Corporation of British Columbia). You must note that there is a difference in taxes depending on where you purchase your vehicle because the tax of buying a car from a dealership and a private sale is different. The only exception is if you purchase a vehicle using First Nation financing in British Columbia, where you don't need to pay any taxes. Read the next section to understand more about the sales tax on used car in BC:

Tax on Used Car at Dealership in BC

At the dealership, you need to pay both GST and PST when you purchase a used car from the dealership. While the GST will always be 5%, the PST rate increases depending on the value of the vehicle. Take a look at this table to understand PST rates for A used car from a dealership in BC:

Tax on Used Vehicles in a Private Sale

When you purchase a car from a private car sale, you only need to pay for the PST tax rates. However, you must note that although you don't need to pay for any GST tax, the PST tax rates are much higher. The following chart illustrates PST on vehicles purchased from a private sale:

What is the BC Luxury Car Tax?

The BC luxury car tax refers to the tax that is applied to vehicles that cost over $55,000. As discussed before, the vehicles that cost under $55,000 only have a 7% PST tax and 5% GST tax, if purchased from a dealership, and a 12% tax if purchased from a private sale. When there's a luxury tax, the PST rate is much higher. For example, if you purchase a vehicle at $100,000, then the PST tax would be 10% in a dealership and 12% in a private sale. The tax rates apply to both new and used vehicles in BC.

Must Read: When Is the Best Time to Buy a Car in Canada? Insider Tips Revealed

How Can You Avoid Luxury Tax on Cars in BC?

You can avoid the luxury tax by avoiding the purchase of luxury vehicles. Ensure the vehicle's price is below $55,000 to avoid paying luxury tax when you purchase a new or used car. You won't be able to avoid the luxury tax if you buy a vehicle that costs over $55,000.

Read More: How To Avoid Paying Taxes On Used Car Purchases In BC

Taxes on Used Zero-Emission Electric Vehicles in BC

If you purchase an eligible zero-emission vehicle, then you will be able to pay less tax on the purchase of used vehicles in BC. For the purchase of any used zero-emission electric vehicles in BC under $75,000, you will only need to pay 7% PST. Read the following chart to understand more about the tax exemption:

Conclusion

If you want to know the taxes you pay on a used car, then you need to know the price of the vehicle. When you pay tax on a used vehicle in BC, the PST tax rate increases with the increase in the price of a vehicle.