Depending on where you live in Canada, you can pay very different tax rates on used vehicle purchases. It’s important to understand what rules apply to your jurisdiction, as both provincial and federal taxes can be part of the equation. Do these rules apply when you are getting cash for junk cars in Calgary, for instance? We get to the bottom of this and more below.
Do You Pay Federal Taxes on Your Junk Car Sale?
No matter where you are in the country, the federal government will get its cut. For used car sales, this amount is 5% of the sales price.
Do You Pay Provincial Taxes on Your Junk Car Sale?
When it comes to paying provincial taxes, the fees vary from province to province. We will be looking at what the taxes would be in Alberta and British Columbia.
Taxes in Alberta
The tax system for used cars in Alberta is very straightforward, in that you will not have to pay more than the federal taxes on the purchase. According to the Government of Alberta’s website, they put the majority of their attention on out-of-province inspections and ensuring the safety of all vehicles on the road.
Taxes in British Columbia
Unfortunately, when it comes to taxes in British Columbia, there could not be a greater contrast than Alberta. This is due to the relative complexity of the system to the west. According to driving.ca, the system has a progressive tax rate that increases with the price of a vehicle. This information is confirmed by rightride.com, which further indicates that the Provincial Sales Tax (PST) will be collected when you register the vehicle with the province.
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