Selling used vehicle, pay tax?

[Kardon]

Hey I was wondering if anyone here could clear something up. I've got a question about taxes on private sales.

I never thought you had to pay tax on a private sale, but recently I've read that if you make a profit selling the vehicle, you need to report it as income and pay tax.. Apparently what they do is compare the price you payed to the price you sold it.(not sure if applies to canada/alberta)

So theres that, but more alarming is the fact that in the past I've been told by the registries that if I want to trade a vehicle straight across it's common to just put $1 as the purchase price for each vehicle. I'm thinking theres a good chance I'll get more than $1.. Anybody know the specifics? I can find info about every other province but alberta.

[Cos]

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[Kloubek]

Never reported any earnings in the past, it's never been a problem. If you are a curber (buy and sell a lot without a license) I imagine they would have an issue. Otherwise, you should be fine.

As far as trading, I've done so without the $1 without incident.

[FraserB]

Even the $1 thing is not needed. I took a pretty much blank bill of sale and registered my Jeep.

[Mixalot27]

I'm not a tax expert but I believe the following would apply:

Personal-use property

When you sell personal-use property, such as cars and boats, you may have a capital gain or loss. In most cases you do not end up with a capital gain, because this type of property usually does not increase in value over the years. As a result, you may end up with a loss. Although you have to report any gain on the sale of personal-use property, generally you are not allowed to claim a loss. For more information and an example, see Personal-use property losses.

To calculate this gain or loss, follow these rules:

If the adjusted cost base (ACB) of the property is less than $1,000, its ACB is considered to be $1,000.
If the proceeds of disposition are less than $1,000, the proceeds of disposition are considered to be $1,000.
If both the ACB and the proceeds of disposition are $1,000 or less, you do not have a capital gain or a capital loss. Do not report the sale on Schedule 3 when you file your income tax and benefit return.
If the ACB or proceeds of disposition is more than $1,000, you may have a capital gain or loss. Report the sale on your Schedule 3.

http://www.cra-arc.gc.ca/tx/ndvdls/t.../menu-eng.html

[boarderfatty]

Technically If you make money i any way you should be declaring it as income. for Private sales unless you are selling a large number of vehicles. My friend was contacted by registries saying that he would have to start declaring income but he was curbing 15+ vehicles a year. if you average under 3 a year they dont pay attention.

If you have a vehicle you use for business purposes you have to take to money out make on selling it as income since you have most likely written off the vehicle purchase.

[Kardon]

So do they have any way of knowing what you spent on the vehicle in the first place?

[Aleks]

Originally posted by Kardon
So do they have any way of knowing what you spent on the vehicle in the first place?

I'm sure if you got audited (this happens) you might have to provide receipts and proof.

[boarderfatty]

Originally posted by Kardon
So do they have any way of knowing what you spent on the vehicle in the first place?

I am sure registries keeps track when you provide a bill of sale to them what you paid for it. then when a new person purchases it, they know how much you sold it for.