As part of the B.C. Government’s 2022 budget, tax changes to the purchase and transfer of zero emission vehicles (ZEV) were announced. Vehicles eligible for the exemption include battery electric vehicles, hydrogen fuel cell vehicles, and plug-in hybrid electric vehicles. If you have any questions about these changes, please contact our NCDA office and we will be pleased to assist you.
Used ZEVs Are Exempt From PST
Effective on February 23, the purchase or lease of used ZEVs will be exempt from provincial sales tax (PST). There will be no PST on used ZEVs even if they have a price above $75,000. The new tax exemption applies to both private and dealer sales; however, for private sales, where ICBC collects the PST, the ZEV must have 6,000 km or more showing on the vehicle’s odometer to be eligible. (Note: the 6,000 km requirement does not apply to sales by GST registrants, such as a dealership, or vehicles imported from outside Canada). Read the BC Government’s tax bulletin, updated February 2022, noting the changes.
Luxury Tax Threshold Adjusted for ZEVs
The budget also included changes to the way the graduated vehicle tax is calculated. Also beginning February 23, the value of new ZEVs subject to the graduated vehicle tax has increased to $75,000 from $55,000. This change means new ZEVs valued under $75,000 are not subject to the graduated vehicle tax. For example: for a new ZEV with a price of $70,000, that means the PST on the vehicle is 7% (assuming it’s from a GST registrant i.e. a motor dealer).
The taxable threshold amount of $55,000 will remain in effect for non-ZEV vehicles. The change for new ZEVs primarily impacts B.C. motor vehicle dealers, as they collect the PST at time of purchase in the vast majority of new vehicle sales; however, Autoplan brokers may need to collect the graduated vehicle tax on new vehicles purchased outside of B.C.
Visit the Consumer Taxation Branch website for more information on vehicle eligibility for the PST tax exemption. Read the BC Government’s tax bulletin, updated February 2022, noting the changes.
New provincial sales tax rules for private vehicle sales – coming October 1, 2022
The budget announcement also highlighted that further changes are coming to the way vehicle tax is calculated on most private vehicle sales. Under the new tax rules coming into effect on October 1, the PST on the majority of private vehicle transfers will be based on the higher of the purchase price or average wholesale value.