Dealers are often asked to accept a trade-in vehicle that is not registered in the name of the customer who is buying a vehicle from the dealer.
Dealers should not accept a trade-in unless it is registered in the name of the person trading it in.
A simple solution exists for common situations involving parents and their children. The parent can transfer the vehicle to be used as the trade-in, into their child’s name without paying HST.
Transfers between the following family members are exempt from HST:
- Between spouses (including common law)
- Between parents and children (including in-laws and step children and stepparents)
- Between grandparents and grandchildren (including in-laws and step grandchildren and step grandparents)
- Between brothers and sisters
Transfers between cousins, aunts, uncles, nieces and nephews and other relatives are not tax exempt.