Bill of sale for used car in Ontario

A Comprehensive Guide
When purchasing or selling a used car in Ontario, a bill of sale plays a crucial role in ensuring a smooth ownership transfer. Unlike standardized forms for other car ownership documents, the Ontario bill of sale requires careful preparation. In this guide, we'll walk you through the essential steps to create a comprehensive car bill of sale, making your vehicle transaction stress-free and legally sound.

Why You Need a Bill of Sale in Ontario

A bill of sale holds immense significance in Ontario's vehicle transactions. It serves as a vital document for several reasons:
  • Transfer of Ownership:
    The bill of sale signifies the legal transfer of ownership from the seller to the buyer. Without this document, the new owner cannot claim rights to the vehicle.
  • Sales Tax:
    Every Ontario bill of sale includes a section for the purchase or selling price, which influences the taxes paid by the buyer. Private sales involve retail sales tax (RST), while commercial sales incur harmonized sales tax (HST), both calculated at a rate of 13%.

What To Include in a Vehicle Bill of Sale in Ontario

Creating an effective bill of sale in Ontario involves including the correct details. While the bill of sale is typically included in the Used Vehicle Information Package (UVIP), ensuring the following information is accurate is crucial:
  • Vehicle Identification Number (VIN):
    The VIN uniquely identifies the vehicle and should match the owner's permit and the vehicle itself.
  • Make, Model, Year, Color, Body Type, Mileage, and Engine:
    Including these details ensures clarity in the transaction and registration process.
  • Purchase Date:
    Registering the vehicle within six days of purchase is essential to avoid penalties. But there are many reasons why you may not register a car during this period, such as: the car needed to be repaired, you were leaving and you did not have the opportunity to do it, or simply did not have the means to do it on time. You can check the exact information about this in any of the nearest service centers.
  • Purchase or Sale Price:
    This figure influences the taxes paid by the buyer and is calculated based on the higher value between the purchase price and wholesale value. If you buy from a private seller, then the price with which you will pay tax will be reckoned with the one that you have in the bill of sale. If this price is lower than the market price, then you will have to pay a 13% tax on the price that will be announced to you at the service center. If you do not agree with this price, you can go to your mechanic and ask him to write you an appraisal with a price that your mechanic considers correct for this car, taking into account its defects.
  • Names, Addresses, and Signatures of Buyer and Seller:
    These details are crucial for vehicle registration.

Template or Hand-Written?

While a bill of sale is a crucial document, it doesn't have to be complicated. Ontario allows you to create your own, whether using a template or hand-writing it. To ensure you don't miss any essential information, you can find free templates from reputable sources like Law Depot and Legal Contracts.

Additional Documents for Registration

Apart from the bill of sale, several other documents contribute to a seamless registration process:
  • Safety Standards Certificate (SSC):
    While not mandatory for registration, an SSC certifies a vehicle's fitness and is required to drive a purchased vehicle. If you do not have a safe certificate at the time of registration, you are entitled to receive a temporary registration, so you can drive a car for another 14 days without having a safe certificate. Having received this certificate, you need to come and present it and you will be issued an updated ownership.
  • Used Vehicle Information Package (UVIP):
    This package contains crucial details about the vehicle's history and condition, including the bill of sale.
  • Carfax Report:
    Requesting a Carfax report provides valuable insights into a vehicle's history, aiding your decision-making.
Find the strength to write a Bill of Sail when you buy a car. Be sure to do UVIP and Carfax before that.