How To Avoid Paying Taxes On Used Car Purchases In BC [2025]

The Different Types Of Taxes in BC

Before we delve deep into the blog, it’s important to understand the different kinds of taxes. By understanding the different kinds of taxes which are charged during the purchase of any good or service, we will develop a clear idea of sales tax on purchase of used cars. Let’s find out:

GST: Federal Goods and Services Tax is an indirect value-added tax levied on all goods and services within Canada. It’s a single tax which all manufacturers, sellers and consumers of any goods or service need to pay. In British Columbia, you need to pay 5% GST.

PST: Provincial Sales Tax is the tax levied by provinces on goods and services. Unlike GST and HST, it is not directly administered by the Canadian government. Each province has its own rules regarding the application and exemption of PST. You need to pay 7% PST in British Columbia.

HST: Harmonised Sales Tax is the combination of GST and PST in five provinces of Canada. It’s a consumption tax paid by local consumers and businesses. The name signifies the “harmonization” or the combination of the taxes. In British Columbia, you don’t need to pay any HST, but instead need to pay for both GST and PST separately. 

How Are Car Sales Taxed In BC?

This is dependent on varying factors. Each province across Canada charges taxes at a different rate. British Columbia, as a province in Canada, plays by their own rules when it comes to taxes. 

When it comes to BC, the taxes on the purchase of any vehicle would require you to pay GST and PST, irrespective of whether it’s new or used. It might get a little confusing, so it would be easier if we break down the entire process for you.
GST + PST = 5% + 7% = 12% Total Tax

The total tax which is levied on the purchase of vehicles would be 12%, new or old. There are more factors in play apart from this. The amount of PST varies with the value of the car purchased. To learn more about it, read the next section of the blog.

Taxes on Used Cars

While purchasing a used car from a dealership or private sale, you need to pay both GST and PST. The GST for used cars is always fixed at a rate of 5%, but the PST increases or decreases depending on the car’s value and sale price.
The value of the used car is dependent on the presence of damage or defects which may be found. For now, let’s understand the variations in PST depending on sale price and where you’re making a purchase from. 

When making a purchase from a car dealership, the used cars will have an additional GST% and PST% charge. While the GST% is a fixed 5%, the PST% keeps increasing from 55,000$ dollars onwards. The following chart neatly illustrates the increase of PST% with increase in sale price of the used car.

In a private sale, used cars do not charge GST%. While this may be true, the PST% is also much higher within the lower ranges. This is to make up for the GST% which is not being added in such purchases. The chart illustrates the PST% which is applicable to private sale of used cars.  

PST On Used Cars Sold Privately

The used car sold at a dealership only requires the buyer to pay the PST as a part of the sale. The PST in private sale of used cars, however, is calculated separately when registering your purchased car at ICBC. They determine whether the car is being sold fairly according to the market value. This system prevents fraud from occurring and ensures proper PST% is being charged. Remember to bring all important documentation of the sale when verifying it at the ICBC.

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Avoid Taxes On Used Car Purchase in BC

Although paying tax on used cars is unavoidable, there are a few ways in which you can minimize or be exempt from paying PST. There are a few options through which you can implement this. 

1. As A New Resident

If you’re new to BC and have bought a vehicle for non-commercial purposes, chances are that you may be eligible for a PST exemption. The only criteria for this is that the car must be at least 30 days old and you should bring it to BC within the year you’re moving into the province.

2. Gift from Blood Relations or Spouse

Receiving gifts from a blood relation or spouse means you may be exempt from being charged with taxes. There are no PST charges applicable in this case.

3. Inheritance

If you receive a vehicle as a part of estate distribution from a deceased individual, then you may be exempt from paying PST.

4. Used ZEVs (Zero Emission Vehicles)

You can avoid PST while purchasing Zero Emission Vehicles. This is in effect till 22nd February 2027. However, if you purchase it through a private sale, it must have 6000 km or more on the odometer for the exemption to be applicable.

5. Obtain a Vehicle Appraisal

Obtaining a vehicle appraisal from an independent motor vehicle appraiser can help you save money which would have been spent on taxes. When you purchase a vehicle from a private sale, if it has defects or any damage, you can receive a certified auto appraisal to assess the vehicle’s value. This can help you save money on taxes because the PST depends on the value of the vehicle. 
These are the few ways in which you can reduce or avoid PST% charges on purchase of used vehicles. It’s best to be aware of all rules and regulations with regards to taxes before making the final decision. 

Conclusion

The purchase of a used car is not a complex process, as long as you have a clear idea of the sales tax on used vehicles. Although it is not entirely avoidable, you can be exempt from paying  some taxes in specific cases, and save money along the way.
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