Hundreds of new cars are sold and purchased in Ontario each day. No less than 1.6 million vehicles were registered in Ontario during 2020. Some of these vehicles were gifted by one family member to another. It may seem like ordinary vehicle registration. But you must follow an entirely different set of rules to transfer vehicle ownership to a family member.
Gifting a car in Ontario is a process that many people are not familiar with. Some specific rules and regulations must be followed to gift a car properly. This article will discuss who can gift a car in Ontario, the benefits of doing so, and the costs associated with it. We will also answer some of the most frequently asked questions about gifting cars in Ontario.
What is the Meaning of Vehicle Ownership in Ontario?
In order to understand gifting a car in Ontario, you must first understand the meaning of vehicle ownership. Vehicle ownership is the legal right to possess and use a motor vehicle. This includes the right to sell or gift the vehicle to another person.
Vehicle ownership comes with certain responsibilities. As a vehicle owner, you are responsible for ensuring that your vehicle is properly registered and insured. You are also responsible for paying any parking tickets or fines.
Vehicle ownership can be transferred in two ways:
- By registering the transfer with the Ministry of Transportation.
- By changing the ownership on the vehicle registration certificate.
The first method is the most common. The second method is only used in special circumstances, such as when a car is being gifted to a family member who lives outside of Ontario.
Who are Eligible Family Members for Gifting a Vehicle in Ontario?
To gift a car in Ontario, you must be a family member of the recipient. The definition of “family member” can vary depending on your relationship with the recipient. For example, aunts, uncles, and cousins are not considered to be family members for the purposes of gifting a car.
The recipient must also be a resident of Ontario. This is because the vehicle must be registered in Ontario in order to be driven on provincial roads. The following family members are eligible to receive gifted vehicles:
- Spouse (including a common law spouse)
- Parent or step-parent
- Grandparent or step-grandparent
- Son or step-son
- Daughter or step-daughter
- Grandson or step-grandson
- Granddaughter or step-granddaughter
- Half siblings (siblings with a common parent)
- Adopted siblings (siblings with a common parent through adoption)
What are the Main Benefits of Gifting a Car in Ontario?
The Ontario Retail Sales Tax (RST) is a provincial consumption tax that is applied to the purchase or lease of most goods and some services in the province. The RST is calculated as a percentage of the selling price or lease amount and is added to the price of the goods or services at the time of purchase or lease.
If you purchase a car from a private seller, you are required to pay the Ontario Retail Sales Tax (RST). However, if you are gifting a car to a family member, you may be exempt from paying the RST.
To be exempt from paying the RST, the recipient of the gifted car must be a close family member of the person gifting the car. The vehicle must also be given as a gift and not sold.
What are the Costs of Owning a Gifted Vehicle?
If you receive a vehicle as a gift in Ontario, you might have saved the initial purchasing price. But still, there are several costs associated with owning a car, which you must consider before accepting a car as a gift. These costs include:
You are required by law to have insurance on your vehicle in Ontario. The Ontario vehicle insurance costs will vary depending on your car, your driving record, and other factors.
2. Maintenance and repairs:
Even the best-kept vehicles require regular maintenance and occasional repairs. These costs can add up over time, so it’s important to factor them into your budget when considering a gifted vehicle.
If you’re planning to drive your gifted car regularly, you’ll need to budget for fuel costs. Gas prices fluctuate, so it’s good to keep an eye on them and budget accordingly.
If you live in a city, you may have to pay for parking fees or permits. This is another cost that you’ll need to consider when deciding whether or not to accept a gifted vehicle.
Before accepting a gifted vehicle, be sure to consider all of the associated costs.
Steps for Gifting a Car in Ontario
If you’ve decided to gift a car to a family member, there are a few steps you’ll need to follow in order to complete the process. These steps are as follows:
1. Gather All the Paperwork:
Prepare a Bill of Sale:
You’ll need to prepare a Bill of Sale, which includes the date of the sale, the names, and addresses of both the buyer and seller, and a description of the vehicle being sold (including the make, model, year, VIN (vehicle identification number), and odometer reading), and the sales price. If there is any money owed on the car, this should also be noted on the Bill of Sale.
Complete a Sworn Statement:
You and the recipient will need to complete a Sworn Statement which includes the date of the sale, your names and addresses, and a declaration that the car was sold as a gift and not for money.
Prepare Vehicle Ownership Permit:
You’ll need to prepare a Vehicle Ownership Permit. The Ontario government requires all drivers to have a valid Vehicle Ownership Permit (VOP) to operate a motor vehicle on any public road in the province. The vehicle permit is issued by the Ministry of Transportation and must be renewed every five years.
To obtain a VOP, an individual must provide proof of identity, residency, and vehicle insurance. Once these requirements have been met, the individual will be issued a VOP, which must be kept in their possession.
Obtain Safety Standards Certificate & Emission Test Results:
You’ll need to obtain a Safety Standards Certificate (SSC) from a licensed vehicle inspection station. A Safety Standards Certificate (SSC) is an official document that certifies that a vehicle meets Ontario’s safety standards. It is required to register a vehicle in Ontario.
To get a Safety Standards Certificate, you must take your vehicle to a Ministry of Transportation-licensed facility and have it inspected. The inspection will ensure that your vehicle meets all required safety standards. Once the inspection is complete, you will be issued a certificate.
Have Your Plate Transfer Declaration Ready:
If you’re gifting a car that doesn’t have license plates, you’ll need to apply for them. To do this, you’ll need to complete an Application for License Plates and submit it to the Ministry of Transportation.
If you’re gifting a car that already has license plates, you’ll need to complete a Plate Transfer Declaration. This form is used to transfer ownership of the vehicle from one person to another.
The Plate Transfer Declaration must be completed by both the buyer and the seller and must include the following information:
- Names and addresses of both the buyer and seller
- Date of the sale
- License plate number of the vehicle
2. Clear Any Outstanding Debt:
If you’re gifting a car that still has money owed on it, you’ll need to pay off the remaining balance before the ownership transfer. Be sure to get a payoff quote from your lender so that you can budget accordingly.
Once the outstanding debt has been paid, you’ll need to obtain a lien release from your lender. This document proves that the debt has been paid in full and that you are now the vehicle’s rightful owner.
If you’re gifting a leased car, you’ll need to contact your leasing company to find out what steps need to be taken to transfer car ownership.
3. Get Car Insurance:
If you receive a car as a gift from your spouse or a close family member in Ontario, you must get it insured before it is registered in your name. Buying insurance for a gifted car is similar to buying insurance for a new car or used motor vehicle you would otherwise purchase. You must have the vehicle insured to protect yourself and other drivers on the road in case of an accident.
The best way to start is by shopping around and comparing car insurance quotes from different providers. Make sure you are getting the coverage you need at a price that fits your budget. Once you have found the right policy, you can purchase it. Then, simply take your proof of insurance to a Service Ontario location to have the car registered in your name.
4. Visit Service Ontario Center:
The final step in gifting a car in Ontario is visiting a Service Ontario Centre with all required documents. At the centre, you will need to submit the following documents:
- Plate transfer declaration form
- Sworn Statement
- Vehicle Ownership Permit
- Proof of car insurance
- Safety Standards Certificate
- Spousal Declaration
- Emission Test
- Bill of Sale
After you have completed all of these steps, the car will officially be registered in your name, and you will be able to drive it on Ontario roads.
Total Costs of Gifting a Car in Ontario:
There are three major costs associated with registering a gifted car in Ontario. These costs include:
- Vehicle permits cost – $32
- A new or replacement licence plate cost – $59
- A licence plate sticker cost – $60 to $120 (Depending on where you live in the province)
Gifting a car in Ontario is not as complicated as it may seem. As long as you have all the required documents and information, the vehicle transfer process is relatively straightforward. Just be sure to budget for the associated costs so that there are no surprises along the way.
To summarize it all up, if you are gifting a car in Ontario, you will need to have the vehicle inspected and get a Safety Standards Certificate. You will also need to complete a Plate Transfer Declaration form and have it signed by both the buyer and the seller. If there is any outstanding debt on the car, you will need to pay it off and get a lien release from the lender.
Once the car is paid off, you will need to get insurance for it. Then, you can take all of the required documents to a Service Ontario Centre to complete the vehicle transfer.
If you have any questions about gifting a car in Ontario, feel free to ask in the comments section below. We would be happy to help!”
Frequently Asked Questions
Do you have to pay taxes on a gifted car in Ontario?
No, you do not have to pay retail sales tax on a gifted car in Ontario as long as it is a private sale between immediate family members. If you are gifting a car, but not as a family gift you may be subject to paying taxes on the sale.
How much does it cost to gift a car in Ontario?
There are three significant costs associated with gifting a car in Ontario: vehicle permits, licence plates, and stickers. These costs can range from $32 to $120 depending on the type of vehicle and where you live in the province. However, the total cost would be about $200-$250.
Can you gift a car to someone in Ontario?
Yes, you can gift a car to someone in Ontario as long as the car is paid off and you have all of the required documents. The process is relatively simple and can be done at a Service Ontario Centre.
Can a Vehicle be registered under two names in Ontario?
Yes, a vehicle can be registered under two names in Ontario. The process is called “joint registration” and allows two people to share ownership and responsibility for a vehicle. Joint registration can be useful for couples or families who want to share a car but don’t want the hassle of transferring ownership every time one person wants to sell or trade-in the vehicle. It’s also an excellent way to protect both parties’ investment in a car.