As a used boat dealer, we get asked all sorts of questions from folks who are both new to boats and seasoned boat buying veterans about buying & selling used boats both through a dealer or privately. By far, the number one question we get asked is “Do I Need to Pay Tax on a Used Boat in Ontario?” The short answer is yes. Contrary to the belief of many, you do need to pay the 13% HST on a used boat in Ontario if the boat is being registered and used within the province (link). If you’re buying a boat in Ontario but taking it be used in another province, that’s a different story – more on that below.

Buying from dealer vs. private seller

Who the tax is paid to however will depend on if it’s a private sale or you’re buying from a dealer (or other ‘business’ entity with a registered tax number). If you’re buying from a dealer, you simply pay 13% of the purchase price to the dealer who then remits it to the Ministry of Finance. Buying from a private seller is not this simple. Instead of paying the seller the HST you are required to remit the sales tax directly. Unlike a car or trailer this payment does not have to take place when you transfer the ownership registration or Pleasure Craft License (PCL) of the boat. Currently, to our knowledge there is no tax audit that takes place when Transport Canada process’s the registration transfer. This means the responsibility lies on the purchaser to remit tax properly for the private sale.

Before you take advantage of the rather ambiguous rules around used boat taxes, know this: To successfully transfer the Pleasure Craft License of a used boat bought privately you need to submit an acceptable bill of sale showing the purchase price of the boat. So although there is no direct requirement to pay the sales tax at the time of transfer, the Government of Canada will have documentation of the sale on file meaning there is a definite obligation to remit taxes in this instance. In the event an audit does take place, you will need to show proof of taxes paid based on the purchase amount. As previously mentioned, there is no known or widespread auditing system for sales tax of private boat sales but there is a legal requirement like the retail purchase of any other item. It’s uncommon but not unheard of for boat owners to receive a letter from the CRA asking for proof of tax payment, whether they bought through a dealer or privately. In short, tax enforcement on boats in Canada can be ambiguous at times but there’s a definite need to keep the purchase of your boat ‘above-board’ and compliant with provincial & federal tax obligations.

What if your boat comes with a trailer, is it a similar process?

No. Trailers are administered by the province the same way automobiles are which means you pay the tax on the trailer at a service Ontario office when you transfer the ownership and get a license plate. Again, this is in the event of a private sale – if you’re purchasing through a legitimate dealer, they are obligated to collect and remit the tax on your behalf. Most dealers should take care of the licensing & registration for you anyways.

It’s also important for private sellers/ purchasers to note that since the provincial portion of the 13% sales tax on the trailer is collected at Service Ontario, your sales tax paid on the boat & engine should exclude the amount listed for the trailer. If you’re buying a boat as a “package” ie. Boat, motor and trailer, we strongly recommend having the seller itemize the values of each on the bill of sale to make the transfer process easier for you.  On top of the sales tax on the trailer price, you can expect a $72 transfer and plate fee ($32 if you have an existing trailer plate registered to you). You do not need to present a safety inspection to complete the license & registration transfer of the trailer but make sure the trailer you’re buying is safe and meets all legal requirements to tow.

What if you’re from another province buying a boat in Ontario?

Again this will depend if you bought through a dealer or private seller. If you’re buying from a dealer, you will only have to pay the 5% GST portion of the HST at time of purchase because most dealers cannot remit taxes outside of the province in which they do business. There are some exceptions to this such as dealerships that are close to provincial borders and regularly have customers from out of province but most dealers can only remit the 5%.

Once the boat & trailer are delivered to the province in which it will be used & registered you will need to pay the applicable provincial sales tax on the boat trailer at the provincial licensing office for cars and other vehicles. This is applicable for both dealer & private sales. You’ll also need to purchase a license plate upon registration  or transfer an existing one that you own. For a dealer sale, the PST on the boat & engine portion of the purchase price should be paid directly to the Ministry of Finance since the dealer should have remitted the 5% GST portion. In the event of a private sale, you would simply include the 5% GST along with your PST payment. 

We hope this article provided some insight and clarity for you and you’re ready to move ahead with your boat purchase with confidence. If there’s anything we didn’t cover or if you have questions on this article, contact us anytime by emailing info@tcmarine.com