There have been some changes in the past week to the way PST gets charged on used vehicles in the province. As such, here are a few things to be aware of in the new budget as it pertains to used vehicles:
1) There is now a $5,000 evaluation on privately purchased or farm use vehicles.
Previously when purchasing a privately used vehicle there existed a deduction of $3000 for the taxable limit of the purchase price. This deduction is gone, but in its place there is now a $5000 exemption from taxes on private or farm use used vehicles. The major distinction is in the words deduction and exemption. Previously if you were to purchase a used personal use light vehicle for $6000, and tax had not been previously paid on it, you would be responsible for the PST only on the limit exceeding $3000, as the first $3000 was deducted and treated like it did not exist, essentially. Under the new rules for that same $6000 vehicle, PST would be payable on the entire amount, without a deduction as under the old rules, subject to the value of the vehicle being greater than the purchase price per point 2. However, if the purchase price and value were $5000 or less, you would be exempt from PST in that situation.
There are exceptions to this, of course. The exemption does not apply to commercial classes of vehicle, to vehicles purchased out of country, or to used vehicles purchased from a dealer (see point 4 for more on dealerships). If in doubt, you can refer to our office, or to the SGI website for more details: www.sgi.sk.ca.
2) Tax is Based on the Value of the Vehicle
Let’s say you got a great deal on a vehicle and purchased a $15,000 vehicle for $5000. I for one would like to know how you did that, because I can’t negotiate to save my life, but what value do you pay insurance on? Per the new budget considerations, The Saskatchewan Ministry of Finance will charge PST based on the purchase price or Red Book value, whichever is the greatest.
3) PST is Now Payable on All Used Vehicles
Prior to April 11, 2018, PST was only payable on a vehicle once for most light vehicles. There always existed exemptions to this, such as commercial use vehicles or sales on trailers or recreational vehicles, but for the most part a used light vehicle would not have had PST owing unless it had never been paid in Saskatchewan. Per the 2018-19 Provincial budget, this has now changed. All vehicles sold used are now subject to PST if they are sold over $5000, regardless of whether PST has been paid previously or not, and is based on the value displayed in the red book or the sale price, whichever is higher.
4) The Good Part
In the 2017-18 Saskatchewan budget a key portion of trading in vehicles was removed: The PST payable portion of a vehicle if a trade in happens. This has been reinstated effective April 11, 2018 as per the 2018-19 budget set forth by the Government of Saskatchewan. So now if you purchase a vehicle for $30,000, and trade in a vehicle worth $10,000 on that vehicle, you will only pay PST on $20,000 again as had been the case prior to the 2017-18 budget. If your trade in is enough to bring the total price to you below $5000, you will not qualify for the exemption still, as we had mentioned in point 1 that vehicles purchased from dealerships do not qualify for the exemption.
So while the taxes on used personal use vehicles have changed, there are bright sides as well. The amount for exemption from tax has increased. The trade in allowance has been reinstated. If you have any question about whether tax is payable on a vehicle, or any other questions pertaining to the change to how PST is collected on a vehicle as there are a few areas not covered by this post, be sure to call us at 306-757-0621, and we can help so you aren’t caught surprised when you go to register your new-to-you used vehicle, as long as you have information about the vehicle.
If you have any other questions it is always a good idea to check out SGI’s website, as they have many pages of information that goes beyond what we have covered here.
Hope you all have a great day, and a great weekend,
Campbell & Haliburton