Buying a new car in Canada involves multiple layers of tax that vary significantly by province. Understanding the total tax burden before signing your purchase agreement helps you budget accurately.
Federal GST on New Cars
Every new vehicle purchase in Canada is subject to 5% federal Goods and Services Tax (GST). This applies regardless of province and is always charged on the pre-tax purchase price of the vehicle.
Provincial Sales Tax on New Vehicles
In addition to GST, each province adds its own sales tax layer on new vehicle purchases:
New Car Tax by Province — 2025
| Province | Tax Rate | Total Tax | Luxury Surcharge |
|---|---|---|---|
| Ontario | HST 13% | 13% | +10% federal over $100K |
| BC | GST 5% + PST 7% | 12% | +8% PST on luxury |
| Quebec | GST 5% + QST 9.975% | 14.975% | +10% federal over $100K |
| Alberta | GST 5% only | 5% | None |
| Saskatchewan | GST 5% + PST 6% | 11% | None |
| Manitoba | GST 5% + PST 7% | 12% | None |
| Atlantic (NS, NB, PEI, NL) | HST 15% | 15% | +10% federal over $100K |
Federal Luxury Tax on New Cars Over $100,000
Since September 2022, the federal Select Luxury Items Tax (SLIT) adds 10% on the amount above $100,000 for passenger vehicles. In BC, the provincial PST also applies at 8% on the luxury portion above $100K.
Example: A $55,000 new SUV in Ontario pays $7,150 HST (13%). A $120,000 luxury SUV in Ontario pays $15,600 HST + $2,000 federal luxury tax = $17,600 total.
New Car vs Used Car Tax Comparison
New and used vehicles are taxed at the same rate in most provinces. The key difference is that new vehicles have no PST exemption window and full GST/HST applies to the purchase price. Used vehicles purchased from dealers also include the same tax rate.
Dealer Fees to Watch For
- Documentation fee: $200-$1,000 — subject to GST/HST
- PDI (Pre-Delivery Inspection) fee: $500-$1,500 — usually GST-applied
- Freight/shipping: $1,000-$2,500 — varies by manufacturer
- Air conditioning levy: $100 (where applicable)
Disclaimer: Tax rates and dealer fees change. Always get a full tax breakdown from your dealer before signing. Verify provincial rates at your provincial finance ministry website.