When selling a car in Toronto, it’s essential to understand the tax implications to ensure compliance with the law. Here are some key points to know about taxes when selling your car in Toronto:
- HST (Harmonized Sales Tax): In Ontario, HST is applicable on the sale of most goods, including vehicles. When selling your car privately, you are generally not required to charge HST, as it is considered a private sale between individuals. However, if you are registered for HST as a business or if you frequently buy and sell vehicles for profit, you may need to charge and remit HST on the sale.
- Capital Gains Tax: If you are selling your car for more than what you originally paid for it, you may be subject to capital gains tax. However, in most cases, personal vehicles are considered personal-use property and are exempt from capital gains tax. It’s always advisable to consult with a tax professional to determine if you have any tax obligations in this regard.
- Record-Keeping: It is crucial to maintain accurate records of the sale transaction. This includes documenting the sale price, the buyer’s information, and any relevant documentation, such as the bill of sale or transfer of ownership. These records can be useful for tax purposes and as proof of the sale.
- Reporting the Sale: As the seller, you are responsible for notifying the Ontario Ministry of Transportation (MTO) about the sale of your vehicle. This can be done by completing and submitting the appropriate paperwork, such as the Vehicle Transfer Notification, within six days of the sale. Failure to report the sale can result in potential liability for traffic violations or other issues that may arise involving the vehicle.
- Transfer of Ownership: It is crucial to transfer the ownership of the vehicle to the buyer properly. This involves completing the necessary paperwork, including the Used Vehicle Information Package (UVIP), and signing the vehicle’s ownership certificate. The buyer will need these documents to register the vehicle in their name and pay any applicable taxes or fees.
- Disposing of Plates and Insurance: In Ontario license plates are tied to the vehicle owner not the vehicle itself. So once you have sold your car, you should remove the license plates and cancel your insurance policy on the vehicle sold. The buyer will need to arrange for their own insurance and obtain new plates for the vehicle.
Remember, tax laws can be complex and subject to change, so it’s always recommended to consult with a tax professional or contact the Canada Revenue Agency (CRA) for specific advice related to your situation. They can provide guidance tailored to your circumstances and ensure that you meet all your tax obligations when selling your car in Toronto.
Contact SellUrCar.ca today to sell your car in Toronto, Ontario. We offer the best prices along with fast and seamless customer service.