Paying Taxes When Buying A Boat

[Blue_Axela]

I've been curious about paying taxes when being a boat. I guess the scenario is when you buy a used boat. As far I understand, you will need to go to MTO to change the name on the trailer and plates. Here you specify how much the trailer is worth and pay taxes on it. Get the plates switched over to your name and new ownership documents on the trailer.

 

Great. Next you transfer the registration number of the boat to your name at your local Service Canada. When I was there last year, they just transferred my name over and never asked for a Bill of Sale or any money for taxes. I even asked them about taxes and they said they don't know but for sure they do not collect any taxes.

 

So now I'm puzzled. Who collects taxes? How do they know how much I payed for the boat if no one asked me for my Bill of Sale on the boat?

[Gerritt]

The MTO is supposed to collect taxes. But people are skirting the system by having the trailer on a separate receipt and service Ontario does not collect taxes on vessels.

 

If the boat was sold to you as a package on the bill the MTO would collect taxes on the entire package.

 

I have heard stories of people getting bills YEARS later from the government telling them to pay their unpaid taxes on the boat. Just be prepared for that letter one day.

 

G

[Terry]

I collect the taxes

make the check out to Canadian Assured Secure Holdings.."CASH "for short and send to the email I have PMed you....LOL

 

 

the MTO collects the taxes..most times the boat motor and trailer is all on one bill so they take the tax for everything...

 

Rev Canada gets the info on registered boats and can come back on you for taxes if not paid

[Terry]

dang Gerritt you are too fast

[bigfish1965]

I've only ever paid tax on the trailer on used boats. New boats the dealer collects. Never had anyone come back to me for more money. I'm pretty sure that th MTO is only allowed to collect tax on the trailer since they have no jurisdiction on the boat.

[Gerritt]

Rick, they will not register the trailer until the taxes are paid on the package. I know I went through it with Spiels boat.

[Gerry]

There is no GST on transactions between individuals. But, there is PST on the sale of the entire package. Apprantly, some got away with paying PST on only the trailer but I suspect that MTO are now aware of this error. And there is no such thing as "MTO not having jurisdiction". They, in fact, do have authority to collect PST on all sales, they just don't (can't) track all transactions between individuals. They do, however, have a system in place that compares boat registrations to PST paid by the regirstered owners.

[Blue_Axela]

I am not trying to avoid taxes. I am more than willing to pay them but I am just confused why MTO or Service Canada doesn't have a better way of collecting the taxes. If Service Canada collected the taxes when you transfer reg#, it would work out.

 

However, what if you only bought a boat trailer for $1000. MTO cannot assume you are cheating the system.

 

The problem with Rev Canada sending you a letter one day is what would they base their tax % on?

[Landlocked]

I had the same questions after purchasing a few different boats over the past several years and was told by Service Canada it is quite possible I'd receive a letter in the distant future...but was also told by another source to "ignore it like any self respecting boater!?" huh?

Last purchase I screwed up and took the receipt for the whole package to the MTO and they still only charged me tax on the trailer. I think you're fine as long as you specify the value of the boat, motor and trailer.

[Blue_Axela]

I had the same questions after purchasing a few different boats over the past several years and was told by Service Canada it is quite possible I'd receive a letter in the distant future...but was also told by another source to "ignore it like any self respecting boater!?" huh?

Last purchase I screwed up and took the receipt for the whole package to the MTO and they still only charged me tax on the trailer. I think you're fine as long as you specify the value of the boat, motor and trailer.

 

MTO only cares about collecting tax on the trailer like you mentioned.

 

I guess its pretty safe to say that you have to wait for a letter from Rev Canada one day to collect the taxes on all the boats you've ever owned. I can just imagine it now...the bill of $10,000 taxes payable comes to you when you're 65 and you go "what the heck?!"

[Terry]

well to answer your question

 

I sold a boat to a guy for x amount of money

he thought he didn't want to pay taxes on it so he wrote his own receipt for the trailer and paid on the trailer

then he registered the boat..some two years later rev. canada contacted me to find out how much I sold the boat for...

it didn't take me long to figure out what was going on, I was pretty sure I didn't make a phony amount for the guy, so I told them the truth..you can be the guy had to pay the tax on it...and if he claimed he paid less and only paid on half the amount he could be charged with defrauding the gov....

[bigfish1965]

It has been a long time since I bought a used boat, but the last time I did the had all the breakdowns on the purchase (insurance wanted the items listed seperately on the bill of sale) and only charged me tax on the trailer. If anyone ever wnted tax for the boat/motor, no one ever asked me for it. If I sold you a fridge, you would not have to pay tax for it. But there is certainly no doubt that the gov't does not make it easy for us to figure out.

After buying a new boat once, I did get a letter from the gov't asking for proof of tax paid. I called number and told them it was bought froma dealer and never heard another thing about it.

If you buy a boat without a trailer, to whom and how would you pay tax? They don't ask for much other than proof of purchase when you register it.

[Andy]

I purchased a used boat privately and paid the PST at the MTO. A couple years later, I received a notice from Revenue Canada. They wanted proof that I had paid the tax, or I would have to pay it again. I thought that this was kinda strange, as you think the MTO records would show taxes paid. I was fortunate in that I had kept all the paperwork in a safe place and once the info was sent to Revenue Canada, I never heard back from them. Andy

[Blue_Axela]

I think the biggest mystery is if you want for the letter from Rev Canada, how do they know what you paid for it? Would they base the taxes on a black book value much like they do with cars?

 

Or maybe you would submit your bill of sale for the boat along with the taxes back to Rev Canada when they send you the letter.

[Gerry]

Revenue Canada or as they are now called CRA, is only responsible for collecting GST. Since there is no GST on these transactions I can't understand why anyone is getting a letter from the feds (CRA). What probably happened is that the letter came from the Minisrty of Finance which is the provincial government looking for the PST. As Terry pointed out, the MOF (Ministry of Finance) will quite likely audit the purchaser by contacting the vendor to verify the amount paid. As long as both of you are singing the same song that will probably end it. With cars, the MOF simply refer to the Black Book value and you pay PST on that amount.

 

Hope this clarifies the situation.

[lew]

You can get a run around on taxes with a new boat too.

 

I bought my boat / motor / trailer new from an Etobicoke marine and paid cash for the entire package, including all taxes, and then the registration was taken care of by the dealer.

 

About 4 or 5 years later I received a notice from the Ontario government saying they had no record of me ever paying PST on my purchase and could I please send them a copy of the Bill of Sale as proof that it had been payed.

 

I sent it off the next day, but then about 6 months later I received another notice saying the same thing, so once again I mailed them a copy, this time by registered mail. Sure enough, after another 6 months or so I received my 3rd letter from them asking for proof that the taxes had been payed.

 

I totally ignored this 3rd letter, and have never heard back from them.....yet

[Gerry]

Lew,

 

Sometimes the dealer is under audit and this is one way that MOF can check to make sure they've remitted the taxes collected by that dealer. The same thing happened to me in 2002. Sometimes though, the left hand doesn't know what the right hand is doing.

[irishfield]

The penalty for fraud on claiming an undervalue amount on a vehicle/vessel with MOF is 100% of the tax that should have been paid on true value + the tax difference owing from what you should have paid. So if they catch you cheatin you'll end up paying double. I know...as I bought my wife an old vette for our Tenth anniversary and had the SELLER make up a second bill..for which I used to pay the tax. Of course "vette's are a high check priority it seems and the MOF called his house and got his wife...and well you know what happened next!

 

Same thing happens with airplanes...at the end of every month Transport Canada is MANDATED to send MOF a list of every airplane that changed hands so the MOF can send out letters to every new registered owner to prove where they paid PST on their purchase. The same thing will happen with a boat. Sometimes it's 4 or 5 years later!

[lew]

Lew,

 

Sometimes though, the left hand doesn't know what the right hand is doing.

 

I think that's the biggest problem Gerry, even when the copies are sent registered mail they don't seem to know where they end up.

[Andy]

You are right, Gerry, it likely was the MOF that sent the letter. Thanks for the info. I might be getting wiser as I get older, I just wish I could remember it. Andy