If you are like me, there is nothing more relaxing than sitting by the fire and reading of the annual provincial budget; either that or filing my income tax. Tis the season!
In the 2018-19 provincial budget, the Provincial Government decided to remove the exemption of PST on used light vehicles and restore the trade-in allowance. As a result all vehicles are now taxable. They have also removed the $3000 PST deduction and replaced it with a $5000 exemption. As an SGI broker we collect tax on behalf of the government. So please don’t shoot the messenger!
These changes were made effective April 11, 2018. We will have a few Q&A answers below to help you understand what these changes have done and how they will impact you.
Are there still exemptions for PST on used vehicle sales?
Yes, if you have purchased a used vehicle at a value of $5000 or less, PST will not be collected on this sale. However, we have seen instances where the red book value has overruled the bill of sale value and you are required to pay PST on the red book value. For example: You purchase a 2010 Chevrolet 1500 for a price of $4995. You got a good price on the truck as the body is beat up and the vehicle needs some definite work. However, when you come in to license the vehicle, the red book values that truck at $10,000. You will be required to pay PST on $10,000 = $600. We have discussed this with Sask Finance and although we don’t agree on this process, this is currently the practice in place. Sask Finance has an appeal process in place to try and recover your money. However, you need to talk to the Ministry of Finance directly on how to do that.
So which vehicles, exactly, does this exemption apply to?
This applies to all non-commercial used vehicles registered for personal or farm use, including:
– cars, SUVs, light vans & trucks (1 ton and less)
– motorhomes and buses
– heavy vehicles
– campers
– motorcycles & mopeds
– snowmobiles
– class T and F registered trailers
If I bought a vehicle for $10,000; does that mean the first $5000 is PST-exempt? (This is how the $3000 deduction worked. ie. first $3000 of the purchase price was PST-exempt.)
No, PST would apply to the full $10,000 or the red book value, whichever is greater.
What is the Red Book value?
This is an industry valuation of vehicles 10 years old and newer; it is used to determine the wholesale value of vehicles.
How does the trade-in allowance work?
With this change, the PST is calculated on the value of the newly purchased vehicle (new or used) less the trade-in value. For example, You purchase a vehicle at $20,000, but you trade in a vehicle worth $8,000. You’ll pay PST on the difference of $12,000.
If I bought a vehicle prior to the April 11th, 2018 deadline, and was unable to register it, do I have to pay PST?
Yes, for private sales, the deadline applies regardless of the date on the bill of sale. For more information visit the Ministry of Finance website or call 1-800-667-6102.
Are the rules for gifting vehicles to family members changing?
The current rules allowing vehicles to be gifted to qualifying family members (provided tax has been paid previously) is now extended to light vehicles as well. “Qualifying family members” are defined as: Spouse and common-law spouse; parent or step-parent; child or step-child, grandparent and step-grandparent; grandchildren and step-grandchildren; brothers, sisters, step-brothers & step-sisters; legal guardian; foster-parent; father-in-law, mother-in-law; son-in-law and daughter-in-law.
If you have a Provincial Sales Tax (PST) question:
Phone: (306) 787-6645 Toll-free: 1-800-667-6102
Email: sask.tax.info@gov.sk.ca
As this can be a tricky subject and each situation may have different circumstances, we encourage you to give Sask Finance a call to help you out in your situation as they have more knowledge on the changes at hand. You can also contact our office and we would gladly help you out as best we can.