News and Insights

CRA Guide RC4100, “HST and the Provincial Motor Vehicle Tax”

Tax Development Feb 22, 2012

The Canada Revenue Agency recently revised this guide to clarify when the provincial component of HST versus the provincial motor vehicle tax (or PST in most provinces) is required to be paid to a province.  Many participating provinces (i.e., provinces that have adopted the HST) still impose a provincial motor vehicle tax to ensure the same amount of tax is paid on the purchase of motor vehicles from GST/HST registrants as well as non-registrants.

In particular, the guide explains that when a vehicle is used in a participating province, the provincial component of HST, or a component thereof, is required to be paid by the purchaser where either GST, but no provincial component of HST, or a lower provincial component of HST, was paid under the place of supply rules.  The place of supply is generally based on the province the registrant supplier has delivered the vehicle to the purchaser, and hence the GST/HST applicable in that province is required to be collected by the supplier on the sale.  However, note that there are proposed new place of supply rules for motor vehicles which may change the place of supply to the province of vehicle registration where the vehicle is registered within 7 days of delivery to the purchaser.  For more information, please refer to GST/HST Info Sheet GI-119, “Harmonized Sales Tax – new Place of Supply Rule for Sales of Specified Motor Vehicles”.

The provincial component of HST is either collected by the provincial motor vehicle registration office upon registration of the vehicle, or, in the case where no registration of the vehicle is required, the provincial component of HST must be self-assessed using form GST489, “Return for Self-Assessment of the Provincial Part of Harmonized Sales Tax (HST)”.  This requirement to self-assess also applies to registrants using the vehicles in their commercial activities (i.e., entitled to claim full input tax credits related to such expenditures).  However, these registrants may be eligible to claim input tax credits on the provincial component of HST paid.

Where no GST/HST is paid on a purchase of a vehicle as a result of a purchase from a non-registrant supplier, the provincial motor vehicle tax may be required to be paid to the province upon vehicle registration.  There are some exemptions from this tax and examples are included in the guide. This guide provides useful tables to help determine which tax, if any, is applicable on a purchase of a motor vehicle.  For more details, see the link to the guide below.  

CRA Guide RC4100