Saskatchewan finally adds Provincial Sales Tax to used car sales

Before this year, the sale of used cars in Saskatchewan received a bewildering provincial tax exemption; but as of this week, used vehicle sales in the province will see the same taxation as every other province in the country.

Sellers of new cars in Saskatchewan called the previous system “horrible” while members of the Auto Dealers Association in the province “‘almost unanimously’ applaud[ed] the change.”

For starters, Auto Association chairman Maurice Plemel explains that the government was missing out on “huge” tax dollars; a practice he believed unsustainable.

“In addition to the application of sales tax, the government also reinstated the trade-in allowance, which allows a deduction for the value of a trade-in when determining PST, so PST will only be paid on the difference in price between the trade-in vehicle and the purchased vehicle.”

Plemel called the old PST and trade-in rules very difficult to explain to customers, touting the new regulations as easier to administrate and understand.

In essence, it was an administrative nightmare that left customers puzzled.

“We couldn’t get the customers to understand it, and no leasing or software company knew how to handle it. Tax on down payments, tax on trade-ins, how do you calculate it? It was a mess.”

In order to keep customers optimistic during the last system, Plemel claims he “had to offer more trade-in allowance for used cars because people buying new cars were being fully taxed on [those] new vehicles.”

Some used vehicles, he said, were only able to be sold in Saskatchewan because of this imbalanced tax exemption. It was not uncommon for people to leave Saskatchewan to find better vehicle deals.

“We asked for and talked about getting back to applying tax all the way through [the process], the same as every other jurisdiction. And the Saskatchewan government saw the light,” he said.

The new rules also state that the PST exemption will only continue for the “private sale of used vehicles” that cost up to $5,000. Cars used privately or for commercial purposes will not be eligible for the $5,000 exemption.