A notice has been issued by British Columbia on the application of the tax on designated property (“TDP”) for vehicles given away as gifts. A TDP exemption exists for vehicles given as gifts when certain criteria are met. A vehicle is considered a gift when no consideration is exchanged between the donor and recipient, and does not include situations where the recipient assumes the outstanding loan on the vehicle, or where a barter transaction is made.
The TDP exemption applies under several circumstances:
- A British Columbia vehicle that is gifted to a recipient in British Columbia. This vehicle must be registered by the donor in British Columbia, or, if not required to be registered, kept and used by the donor in British Columbia.
- An out-of-province vehicle that is gifted to a recipient in British Columbia, when either the social service tax, TDP, provincial component of HST, or sales tax imposed by another province was paid by the donor. Proof of tax paid must be provided by the recipient upon registration. This vehicle must either be registered in another province, or kept and used in another province by the donor.
Form FIN 319 must be completed by both donor and recipient and presented upon registration. It replaces the existing gift letter previously used by gift recipients. This form should also be retained by the recipient, in the event of an audit. Failure to provide accurate information or claiming the exemption when tax should have been paid is subject to interest and penalty. Any willful attempts to evade tax may result in charges under the Consumption Tax Rebate and Transition Act.