1 Vehicle Purchase Details
📖 How It Works — The "Greater Of" Rule▼
The "Greater Of" Rule Explained
Ontario requires RST to be paid on the greater of two values:
- (a) The purchase price actually paid to the seller
- (b) The Red Book / Canadian Red Book wholesale value
This rule prevents buyers from declaring an artificially low price to reduce their tax bill.
Why Red Book Value Matters
The Canadian Red Book is a recognized industry publication that lists wholesale vehicle values. ServiceOntario uses this value as a reference point. If the price you paid is lower than the Red Book value, you'll pay RST on the higher Red Book value.
Worked Example
You buy a used car privately for $8,000:
Even though you paid only $8,000, you still pay RST on the $12,000 Red Book value.
What If You Paid MORE Than Red Book?
If you paid $15,000 for a car whose Red Book value is $12,000, you'd pay RST on the $15,000 purchase price (the greater of the two).
📋 What You Need at ServiceOntario▼
Required Documents Checklist
- Signed bill of sale — from the seller, showing the purchase price
- Vehicle permit (green ownership) — signed by the seller in the "transfer" section
- Used Vehicle Information Package (UVIP) — mandatory for all private vehicle sales in Ontario
- Safety Standards Certificate — required if you want to plate the vehicle (valid for 36 days)
- Proof of insurance — valid Ontario auto insurance
- Payment for RST + registration fees — cheque, debit, or credit
Where to Go
Visit any ServiceOntario centre. Find one near you at ontario.ca/page/serviceontario.
What If You Can't Find Your Red Book Value?
If you can't find your vehicle's Red Book value, ServiceOntario will determine the value for you. If you believe the value is inaccurate (e.g., due to damage or high mileage), you can request an appraisal at your own cost.
2 Frequently Asked Questions
How much is tax on a private car sale in Ontario?
Ontario charges 13% Retail Sales Tax (RST) on the purchase of a used car from a private seller. The tax is paid at ServiceOntario when you register the vehicle.
Do I pay tax to the seller?
No. In a private sale, you pay the seller only the agreed purchase price. The RST is paid separately to ServiceOntario when you register the vehicle in your name.
What if I paid less than the Red Book value?
Ontario uses the GREATER of the purchase price or the Red Book wholesale value. If you paid less than the Red Book value, your RST is calculated on the higher Red Book value — even if you paid less.
Can I use a lower declared price?
No. Ontario's greater-of rule uses the Red Book value to prevent under-reporting. If the Red Book value is higher than the price you declared, you'll pay RST on the Red Book value.
Does GST/HST apply to private sales?
No. GST/HST does not apply to private used car sales in Ontario. Only the 13% RST applies.
Can I trade in on a private sale?
No. Trade-in credits only apply at registered dealerships. Private sales do not allow trade-in credits.
When do I pay the RST?
You pay the RST at ServiceOntario when you register the vehicle in your name. You cannot legally drive the vehicle on public roads until it's registered and plated.
3 Official Resources
Phone: 1-800-267-8097
Verify all rates and rules with ServiceOntario before registering your vehicle.
⚠️This tool is for information purpose only. We do not guarantee any claim.
It is made based on data publicaly available on official website of concerned department.
Last Updated: March 2026 | Official Determination Required