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Tax on a Car in Ontario
December 14, 2025
If you're buying a vehicle in Ontario, be prepared for the 13% sales tax, this is the single most important number you need to budget for. Understanding vehicle tax in Ontario is crucial, whether you're buying new or looking at taxes on used cars.
Here is a straightforward guide to how sales tax works on vehicles, designed to answer the most common questions from Canadian buyers.
1. How Much is the Tax on a Car in Ontario?
The standard sales tax on cars Ontario residents pay is 13%.
This is the Harmonized Sales Tax (HST), which includes the 5% federal portion (GST) and the 8% provincial portion (PST).
Read More: Selling The Car in Canada
The 13% Tax on a Car in Ontario: When and What You Pay
The main difference in how you pay depends on where you buy:
|
Where You Buy |
Tax You Pay |
When You Pay |
|---|---|---|
|
From a Dealership |
Harmonized Sales Tax (HST) - 13% |
Paid directly to the dealer at the time of purchase. The dealer remits the tax to the government. |
|
From a Private Seller |
Retail Sales Tax (RST) - 13% |
Paid directly to ServiceOntario when you register the vehicle in your name. |
Crucially, do you pay tax on private car sales in Ontario? Yes, you do. While the seller does not collect the money, the buyer must pay the full 13% tax when registering the vehicle.
Read More: Toyota Sienna Second Hand
Taxes on Used Vehicles in Ontario: The Surprise Calculation
When buying taxes on used vehicles in Ontario, especially from a private seller, the tax calculation is often a surprise for first-time buyers. The government has rules in place to prevent people from declaring a low price to avoid tax.
The tax for used car in Ontario is calculated on the higher of these two amounts:
- The actual purchase price (the amount you paid the seller).
- The wholesale value of the vehicle (the fair market value determined by the government's official pricing guide, often called the Canadian Red Book value).
This means if you buy a vehicle for $10,000 but the government values it at $15,000, you will be paying sales tax on used vehicles calculated on the $15,000 amount (13% of $15,000 = $1,950 in tax). This is the key difference you need to know about taxes on used car sale.
Read More: Lease a Car in Canada
How Much Tax on a Used Car in Ontario: An Example
To calculate your total cost, you can use a vehicle tax calculator Canada tool for an estimate, but the formula is simple:
|
Scenario |
Calculation |
Tax Paid |
|---|---|---|
|
You buy for $12,000 |
Government Wholesale Value: $10,000 |
13% of $12,000 = $1,560 (Purchase Price is Higher) |
|
You buy for $10,000 |
Government Wholesale Value: $12,000 |
13% of $12,000 = $1,560 (Wholesale Value is Higher) |
Read More: 8 Cheapest New Cars in Canada in 2025
How to Legally Lower the Ontario Sales Tax on Used Cars
While the taxes on a used vehicle are mandatory, there are two legal ways to reduce the taxable amount:
- Trade-In: If you trade in your old car at a dealership, you only pay the 13% sales tax on cars Ontario on the difference between the price of the new car and the trade-in value. This is the biggest tax saving most buyers realize.
- Gifts: You do not have to pay the car tax sale if the vehicle is given to you as a gift from a qualifying immediate family member (spouse, parent, child, sibling, etc.). You must complete a Sworn Statement form at ServiceOntario
Read More: Good Used Cars Under $20,000
Connect with CarRookie
Ready to buy your next car and manage the sales tax on used vehicles in Ontario? Don't let a poor credit history stop you. CarRookie is a trusted dealership that connects buyers across Canada to the top agents, even those with bad or poor credit, helping you navigate the entire purchase process seamlessly.
If you are looking for a quick estimate on what your tax bill will look like, simply use a Canada car tax calculator online to get prepared.
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