How to Gift a Car to Someone in Ontario
Written by DriveAxis.ca January 04, 2023
Buying a car for someone is an incredibly generous gift, but it’s also a complex process that requires a lot of checking to make sure you’re doing it right. In Ontario, the gifting of a car involves specific rules that must be adhered to, lest you run afoul of government regulations.
Nevertheless, it’s a straightforward process that simply requires a bit of time and research before you make the move. Once you’ve got all the details down, you can move onto the fun part of gifting a vehicle to a child, a spouse, or a family member, and watching the smiles and drama unfold. Here’s how to do it right.
FAMILY MEMBERS ONLY
While it is possible to “gift” a car to a close friend, there’s no allowance for the types of benefits and savings normally associated with family members. If you’re buying a car for your child, grandchild, parent, grandparent, spouse, sibling, stepchildren or parent/child in-laws, you’re in the clear. If, however, you want to gift a car to an aunt, uncle or cousin, you are out of luck, unless they won’t mind an extra fee attached.
The main benefit of gifting a car to one of the above listed family members is that they will not have to pay RST (retail sales tax) on the total value of the vehicle. This is a practice most commonly associated with the private selling of a vehicle to another recipient. However, family members can receive the car for free, without having to pay the RST upon acquisition of the vehicle.
YOU MUST OWN THE VEHICLE
Normally, gifting a vehicle involves the process of actually buying it outright and then passing it along to your family member. However, if you own a vehicle that has not been fully paid for, you cannot gift it. The vehicle must be in your possession, and fully paid off with a clean title in order to allow for a smooth transfer. Once again, this is similar to a private car sale in order to guarantee that the next owner doesn’t have to deal with any finance or lease issues.
GET A BILL OF SALE
A bill of sale is common when selling a vehicle to someone else, but it should also be kept when gifting a car to a family member. It’s essentially a method of recording the gifting transaction so that no unfortunate issues arise later on. It is recommended that you obtain a UVIP (Used Vehicle Information Package) which includes a blank bill of sale that you can fill out. However, if you aren’t willing to wait a few business days for one to arrive in the mail, you may also hand-write the bill of sale, or create and print your own, digitally.
BRING YOUR VEHICLE OWNERSHIP PERMIT
Your Ontario Vehicle Ownership Permit is that recognizable green document you receive when you buy a car, and it is composed of two parts, one of which you can tear away and bring with you when transferring ownership of your vehicle. This allows you to change the status of your vehicle and make the transfer of ownership to your family member.
GET A SAFETY STANDARDS CERTIFICATE
Just as when selling a car, you need to have a Safety Standards Certificate on hand when gifting one to a family member. This is a routine process which guarantees that the car is running in tip-top shape, and devoid of mechanical or safety issues that could cause harm to the new owner. SSCs can be obtained through many third-party mechanics shops and dealerships for a modest fee, and they may also include an emissions test. The only family member exempt from this particular step would be your spouse, so bear that in mind.
OTHER DOCUMENTS
This may seem like a lot, but don’t fret! You’re almost there! The only thing left to do is to obtain a Plate Transfer Declaration if you’re gifting the car to your spouse, parent or child. Bear in mind that these are the only three family member types allowed to legally possess your existing license plate. Any family member outside of that circle must bring their own plates, or get new ones.
Second, it goes without saying that whichever family member you’re gifting your car to will require a valid driver’s license, and both parties will need to bring one in order to complete the transfer.
Third, don’t forget insurance. It’s tempting to gift your car to a family member and watch them go for a drive, but if they don’t have auto insurance, it’s a recipe for absolute disaster. Driving without insurance is illegal in Canada, so don’t take the risk, even if it’s just a quick boot around the block.
CONCLUSION
Gifting a car to a family member isn’t just an incredibly cool and generous thing to do - it also saves money. If your family member was saving up to buy a car, you can surprise them by beating them to the punch. That, combined with the advantage of dodging the RST charge makes for a big win, and one unforgettable memory.
Interested in buying a car for your family member? Drive Axis has lots to choose from, and you’re guaranteed to find one that your family member is bound to love! Contact us today, or browse our inventory of excellent vehicles for the perfect pick that will knock their socks off.
