Trade-in sales tax implications

[slim_shady]

Anyone know for sure what the sales tax implications are for trade-in vehicles in Ontario?

For example: I buy a $30k new car, and trade in a vehicle where the dealer offers $10k (but $7k is still owing to the bank).

In this scenario, would the sales tax be deducted by $10k x 13% (or) ($10k-$7k) x 13%?


A buddy is planning on trading in an almost new car with very little equity and we were discussing exactly how much sales tax benefit he would get.

[AGR-1]

Selling price = 30,000.

Trade in=====10,000

Difference====20,000

PST @8%=====1,600

GST @5%=====1,000

Total========22,600

Pay out=======7,000

Total========29,600

[slim_shady]

That's what my buddy thinks too, but are you sure there's no sales tax charged on the $7k owing that the dealership is effectively paying?

[afretes]

This is correct.

Selling price = 30,000.

Trade in=====10,000

Difference====20,000

PST @8%=====1,600

GST @5%=====1,000

Total========22,600

Pay out=======7,000

Total========29,600