In British Columbia (BC), buying a used vehicle often comes with a hefty tax bill in the form of Provincial Sales Tax (PST)—typically 12% on most used vehicle transactions. However, not all purchases are taxed equally. Some exemptions, rebates, and special scenarios allow certain buyers to legally avoid or reduce PST.
Limited Time Automotive Amazon DealsIf you’re planning to buy a used vehicle in BC and want to save hundreds—or even thousands—on taxes, this guide will walk you through the legitimate options available to you.
Understanding the 12% PST on Used Cars
In BC, used vehicle buyers must pay PST whether they purchase from a private seller or a dealership. Here’s how PST is calculated in common scenarios:
| Purchase Type | PST Rate | Tax Basis |
|---|---|---|
| Dealer purchase | 12% | Sale price |
| Private sale | 12% | Higher of sale price or Black Book wholesale value |
| Family gift | 0% | Tax-exempt if eligible |
| Inheritance | 0% | Tax-exempt if supported by legal documentation |
Unlike dealership sales, where PST is based on the invoice amount, private sales are often assessed using the Canadian Black Book wholesale value—especially if the declared price is unusually low.
1. Transfer as a Gift Between Family Members
BC offers a full PST exemption for vehicle transfers between qualifying family members. This is one of the most common and fully legal ways to avoid tax.
Eligible relationships include:
- Spouse or common-law partner
- Parent or child (including step and in-laws)
- Grandparent or grandchild
- Siblings (including half- and step-siblings)
To claim the exemption, you must:
- Submit the Transfer/Tax Form (APV9T)
- Complete the Gift of Vehicle Declaration
- Provide proof of relationship (e.g., ID, birth certificate)
Example:
| Giver | Recipient | PST Owed |
|---|---|---|
| Mother | Daughter | No |
| Brother | Sister | No |
| Uncle | Nephew | Yes (12%) |
If the relationship doesn’t fall under the eligible categories, PST is payable, even if the vehicle is a gift.
2. Inherited Vehicle Transfers
If you’ve inherited a vehicle following the death of a relative, you are eligible for a PST exemption—provided that:
- The deceased person was the legal owner
- The transfer is supported by a will, probate, or death certificate
You’ll need to present this documentation at an ICBC Autoplan broker when completing the transfer.
This exemption is applicable regardless of the value of the vehicle or the relationship, as long as the transfer results from a death.
3. Tax Exemption for First Nations Purchases
If you purchase a vehicle on First Nations land, you may qualify for a full PST exemption, but only if specific criteria are met:
- The buyer and the vehicle must be physically present on reserve land during the sale
- The seller does not need to be Indigenous
- The transaction must occur entirely on-reserve
Proof such as a signed declaration, photo evidence, or in-person transfer on-reserve may be requested.
Comparison:
| Scenario | PST Owed |
|---|---|
| Sale occurs entirely on-reserve | No |
| Buyer picks up car off-reserve | Yes (12%) |
| Buyer not present during transfer | Yes (12%) |
While legal, these transactions require attention to documentation and logistics.
4. Avoiding Double Taxation on Out-of-Province Vehicles
If you’re moving to BC and bringing your vehicle with you, you may qualify for a PST exemption, if:
- You owned the car for at least 30 days before arriving
- The vehicle was not purchased to be resold
- You paid equivalent taxes (like HST or PST) in another province
To claim this, bring the following:
- Bill of sale
- Proof of tax paid (e.g., invoice with tax line)
- Out-of-province registration
- ID showing the date you moved
Example:
| Province Moved From | Tax Paid | PST Due in BC |
|---|---|---|
| Alberta (0% sales tax) | None | Yes (12%) |
| Ontario (13% HST paid) | Yes | No |
| Quebec (9.975% QST) | Partial | Likely yes |
The Ministry of Finance assesses each case individually, especially when taxes in the previous jurisdiction are lower.
5. Why Under-Reporting the Sale Price is a Bad Idea
A common yet illegal tactic is declaring a lower sale price on the tax form to reduce PST. ICBC combats this by referencing the Canadian Black Book wholesale value. If the declared price is 25% or more below the market value, ICBC flags it for review.
You may be asked to provide:
- A mechanic’s report if the vehicle has major damage
- Proof of repairs or accident history
- Written statements justifying the low price
If ICBC doesn’t accept your explanation, you’ll pay PST based on their assessed value, not what you claimed.
This method is risky, and could result in penalties, extra taxes, or an audit.
6. Are Used EVs PST-Exempt in BC?
As of 2025, BC no longer offers full PST exemptions for used electric vehicles (EVs). However, some dealerships offer rebates or discounts on used EVs under provincial incentives. These vary throughout the year and are only applicable to dealer sales, not private transactions.
Check the CleanBC website for current incentive programs.
Summary: PST Exemptions and Legal Tax Strategies in BC
| Strategy | PST Saved | Legal? | Conditions |
|---|---|---|---|
| Gift between qualifying family | 100% | ✅ | Gift form, proof of relationship |
| Inherited vehicle | 100% | ✅ | Death certificate, will, proof of ownership |
| Purchase on First Nations land | 100% | ✅ | Buyer and vehicle present on-reserve during sale |
| Bringing taxed vehicle from another province | 100% | ✅ | Proof of tax paid, owned 30+ days prior |
| Under-reporting sale price | Varies | ❌ | Illegal, often caught by ICBC |
| Used EV dealer incentives | Partial | ✅ | Varies by program, only at licensed dealers |
Final Thoughts
For most people buying a used car in BC, PST adds a significant cost to the transaction. But for those who qualify—via family gifting, inheritance, First Nations land sales, or interprovincial transfers—there are legitimate ways to avoid or reduce this tax.
Always ensure your documentation is accurate and complete. Attempting to mislead ICBC with false declarations or underreported sale prices can lead to unexpected tax bills and legal trouble.
If you’re not sure whether your situation qualifies for a tax exemption, consult an Autoplan broker or visit the BC Ministry of Finance website for clarity.
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