When Justin Long purchased his 2018 Toyota Tacoma through a private sale he says he was shocked when he went to register his truck and pay the Provincial Sales Tax (PST).
The B.C. resident had purchased his truck for $33,000 which had approximately 183,000 kilometres on the odometer.
However, Long says he was told by his insurance broker the vehicle was valued at $36,433. “It didn’t make any sense to me,” Long told Consumer Matters.
In B.C., purchasers of a vehicle in a private sale must pay 12 per cent PST at the time of registration. The PST is calculated on either the purchase price or the Canadian Black Book average wholesale value – whichever is greater.
In Long’s case, he had to pay PST on $36,433, which equated to $4,371.96 in PST.
However, after questioning the broker on the PST calculation, Long says he discovered the specific mileage of a vehicle is not factored into the equation.
“It’s a serious problem that has to be rectified and I think a lot of people don’t realize this is going on,” he said.
B.C.’s Ministry of Finance uses the Canadian Black Book average wholesale value which includes information like year, make, model, trim and average mileage to determine the vehicle’s value.
The Ministry of Finance confirmed to Consumer Matters it does not use the vehicle’s exact odometer or mileage reading.
However, a buyer or seller can get an appraisal of a vehicle if it’s believed the actual value is less than the average wholesale value.
Long decided to get an appraisal paying $100 plus tax out of his own pocket. “I’m losing over a $100 that I should not have to spend in the first place. I might have been happy with the ICBC valuation if they correctly entered the odometer. I feel we are creating this systemic issue that folks should just not have to go through.”
Owner of North Vancouver-based B.C. Auto Appraisals, Hatef Emam appraised Long’s truck at $31,500 taking the exact mileage of the vehicle into consideration.
He says he’s shocked specific mileage isn’t considered when calculating the PST. “I personally think it’s wrong. It’s easy enough to input. I think it could save people a lot of time and money and I think it’s the reasonable way to assess the taxes if they choose a system that allows them to input the mileage,” Emam said. “It’s the main factor of a vehicle’s worth. It’s a driving factor of the value.”
According to B.C.’s tax rules, if the appraised value of the vehicle is lower than the average wholesale value – the greater amount of the appraised value and the purchase price are used to calculate PST.
B.C.’s Minister of Finance Katrine Conroy declined an interview with Consumer Matters. Instead, the minister said in a statement that “PST has always been payable on privately purchased new or used vehicles in B.C. and this change brings us in line with other provinces.
“We know there are circumstances where the vehicle’s condition impacts its value. That’s why we encourage people to get an appraisal if they believe the average wholesale value is too high. If that turns out to be the case, they can pay a lower amount.”
Conroy added that revenue raised from PST supports important services people rely on, such as health care and education.”
In Long’s case, he now stands to be refunded more than $400.
“Why are we making this more difficult on British Columbians? It doesn’t make sense to me,” he said.