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Used car sales: British Columbia government plans to declare value

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The tax to be paid is derived from the sale price declared by the buyer and the seller. BC government, concerned about deception, plans to ignore leaked price if it’s lower than going rate

There are important disclaimers on the government form that must be completed each time a used vehicle changes hands in British Columbia.

The seller and the buyer must certify that the price entered on the form is correct.

To drive the point home, there is this alert: “The Ministry of Finance regularly checks vehicle transactions to verify the information provided. Any false information regarding the sale price or the purchase price… or the tax to be paid may result in fines and penalties.

“It is an offense under provincial commodity tax laws to make false or misleading statements for the purpose of evading payment of tax. A person who commits such an offense is liable to fines and/or imprisonment.

Last month’s budget announces that the government will go further from October. Not by increasing the fine or verification. Instead, the Ministry of Finance will start ignoring the disclosed price if it is lower than the going rate. Any price below the year, make and model estimates commonly used in the industry will not be considered. The higher “black book” estimate of national averages will be used instead, to maximize the tax levy.

Finance Minister Selina Robinson reassured everyone that most other provinces are doing the same. This is to “make sure people don’t undervalue the car and use the loophole of just putting in a number that forces them to pay less.

“It’s really about making sure everyone plays by the rules, and that’s something other provinces are doing.”

But it’s a bit more than that. This is to completely circumvent a figure that a taxpayer certifies to be true and substitute one that is more to the government’s liking.

If they can do it with cars, they can consider it in other areas.

The verification that the government is warning buyers about is supposed to be the government’s way of making sure everyone is following the rules. The change suggests it’s not working or it’s an empty threat. The ministry estimates that the change will bring in an additional $30 million a year, as private sale prices are still significantly below market value.

Opposition Liberals flagged the article on Budget Day and have come back to it a few times since. Looks like they’re going to hold a grudge against the arbitrary new measure for a while just to see where it goes.

The budget itself suggests that there is potential there. He acknowledged that “those involved in private vehicle transactions are more likely to be low to middle income…living in a rural area.”

These are not the kind of people governments usually target for tax grabs. There is also a contrast between two different types of vehicle buyers. This low-income rural group faces increased taxes on used vehicles. Buyers of new zero-emission vehicles, which are typically in the $150,000-plus per year bracket, get tax breaks.

Liberal MP for Peace River South, Mike Bernier, broached the subject this week. He gave a local example of how unfair this could be. Someone buys a rusty, high-mileage old pickup truck for $300, perhaps a youngster’s first vehicle in which to learn to drive.

But if the book value is higher, the Ministry of Finance will override that figure and the tax bill will be higher. “According to the NDP, it is now tax evasion. They are basically being criminalized by this government for making a deal. »

Another example provided from an actual listing is for an eight-year-old van worth $12,500 per pound. A buyer who gets it for $10,000 would pay $700 in provincial sales tax at the rate of 7%.

When the new measure takes effect, the tax will be on the book value of $12,500, regardless of the actual sale price. The tax bill will therefore be $175 higher.

Buyers will be taxed on the savings made through negotiation, in addition to the actual price. If they want to dispute it, they will have to buy an appraisal.

NDP backbenchers joined Robinson in defending the change, saying it will tackle fraudulent tax evasion. It can do it, but assuming everyone is lying is a dismissive and insulting way to go about it.

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