One of the most common questions we get is: "I am buying my uncle's car. Do I have to pay tax?"
The answer is: It depends. British Columbia has specific rules for "Related Individual" transfers, and getting it wrong can be expensive.
Scenario A: The True Gift (Tax Exempt)
If a close family member (parent, child, spouse, sibling) gives you a vehicle for $0, it is tax-exempt. You fill out a "Gift of a Vehicle" form, and no PST is due.
But there are catches:
- The giver must have paid tax on it originally.
- You can only do this once per vehicle per relationship.
- It must be a true gift. If money changes hands under the table, it is tax fraud.
Scenario B: The "Family Discount" Sale (Taxable!)
If you pay any amount of money (e.g., your uncle sells you his $10,000 truck for $2,000), it is not a gift. It is a sale.
And this is where the trap lies. Because you paid $2,000, ICBC will look at the Black Book value ($10,000) and say: "That price is suspiciously low."
They will then charge you PST on the $10,000 Black Book value, ignoring your family deal completely.
How to Protect Your Family Deal
If you are buying a car from family for a low price because of its condition (or just a nice discount), you need to prove the value.
A FIN-320 Appraisal is the only way to legitimize a low sale price in the eyes of the government. If the car has issues that justify the low price, we document them.
Example:
- Uncle's Price: $2,000
- Black Book: $10,000
- Our Appraisal (due to condition): $3,500
Instead of paying tax on $10,000, you pay tax on $3,500. You save hundreds of dollars, and everything is legal and above board.
Need Help?
Don't guess at the broker's counter. Get your paperwork sorted before you go.
