The Canadian Red Book is an industry standard that lists the wholesale and retail values of used cars. It is used by car dealers, insurance companies, and others to determine wholesale value, and, therefore, the RST of a used vehicle.
The Red Book is constantly changing, providing values based on the average amount paid for vehicles of the same make, model, and year. Mileage, vehicle condition, and accessories are not taken into account.
The RST is based on either the purchase price or the Red Book value, whichever is greater.
As mentioned, you will have to pay 13% of the purchase price when you register the vehicle. So, if you bought a car for $10,000, $1,300 is owed in RST.
There are instances where you can be exempted from RST or have a percentage of the tax refunded. For instance, if the purchase price is lower and you feel that the lower figure makes more sense (because of damage, excessive wear, etc.), you can have the vehicle professionally appraised and be billed based on the lower figure.
Yes! While sales tax is still required when buying from a dealership, it is often already factored into the price, so it is not a surprise when it is time for papers to be signed.
There are ways to offset the amount of sales tax paid. An easy way to save money on sales tax when buying a new-to-you car is by shopping at a dealership. You can take advantage of trade-in benefits. When you trade in your old car, your new car's purchase price is reduced by the value of your trade-in. This means that RST is only due on the reduced amount of the sale. You would save $130 for every $1,000 of your trade-in this way.
Sales tax is often ignored by prospective vehicle buyers until it is too late. You do not want to be shocked by an additional bill after buying a vehicle. Check out the used car inventory at AutoPark Brampton to view dozens of possible vehicles and save money on sales tax and other factors over buying from a private party.
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