SGI DICTATES TAX CHARGED

Private sales of used vehicles subject to levy

REGINA Following a change made by the provincial government in this week’s budget, SGI is now dictating the tax charged on the used car sales market.

“When a person goes to register that vehicle that was purchased in a private sale, (SGI) will collect or apply (provincial sales tax or PST) on the higher of the purchase price or Red Book value,” said Brent Hebert, assistant deputy minister for revenue in the province’s Finance Ministry.

The change is related to the six per cent PST now applied to the sale of used vehicles over $5,000. In calculating the sales tax, dealer values are based on the purchase price of the used vehicle as reflected in the bill of sale, and the dealer is responsible for collecting and remitting the PST. But on a private sale, SGI collects the tax when the vehicle is registered.

There is an under $5,000 PST exemption, but it will not apply to private sales of used vehicles registered for commercial use or dealer sales of used vehicles.

Hebert says this was done because “it provides a check and balance to ensure PST is being paid on fair market value” and noted the same is done in Manitoba and British Columbia.

If someone buying a vehicle takes exception to paying PST on the vehicle’s Red Book value, they can apply for a review from the Ministry of Finance.

So if someone buys a used vehicle for less than the Red Book value but is taxed on the book value, they can challenge it. Hebert says this can be done in instances such as when a vehicle has high kilometres, is damaged or has excessive use.

Those buying a used vehicle in a private sale will pay the PST when registering the vehicle — even if bought prior to the change in this week’s budget.

NDP Leader Ryan Meili is critical of that decision.

“This government should have made it clear to the public what was going to be happening as soon as they made this announcement, and really make it clear to SGI how to do this in a way that wasn’t punishing people who had made a decision prior to this being put in place,” he said.

He said the appeal process puts the onus on the individual when the government should take leadership “to say this is our policy and this is how we can make sure it’s applied in a fair way.”

Meili also raised concern with the PST exemption disappearing altogether, saying it’s making life less affordable for people.

A full PST exemption continues to apply to used vehicles given as gifts to certain family members, such as spouses, parents/ legal guardians, children, grandparents, grandchildren and siblings.

The province forecasts the tax will generate $95 million in revenue for 2018-19.