Canadian TAX laws that you may need to know about salvage cars

Many people intending to purchase cars may be a bit skeptical about investing into a salvaged car. However, most of these vehicles are still very able-bodied and can offer high-quality service. It is important to know more about a vehicle before you purchase it. On this post, MPI Auction archive; a database manager for a public salvage auction in Manitoba, offers you tips on common Canadian legal and taxation processes you should set your eyes on when purchasing or selling a Salvaged vehicle

To begin with, Salvaged Cars can be provided with Canadian licenses as long as the original damage was not as a result of floods. It should also be manufactured after Jan 1st, 1971 when Canada allowed importation of salvage vehicle parts.

Under the registrar of imported vehicles (RIV), if acquired from the US, the vehicle has to be admissible in the Transport Canada’s List of Vehicles Admissible from the United States. However, on the title, it will forever be stated that the car is salvaged no matter the amounts of work put in it to make it look better.

What is the Branding process?

This is the most vigorous stage in this acquisition. One may land you in trouble if not followed up correctly.

Say, you are giving up your car as salvage after an accident. It will need to be branded. This is determined by the insurance company, importers, auctioneers or the salvagers.

What are the branding timelines?

The brand given should be reported to the Ministry of transportation after 6 days of receiving ownership of the damaged car. If not, it should be 14 days after the date when the insurer settles the ownership claim.

Failure to report your branded car to the Ministry of transportation may result in a penalty of $400-$20,000 as it is an offense.

What happens to cars that are acquired from different states?

Salvaged Vehicles acquired from outside Ontario or the US, have to undergo inspection to see that they meet the required reparation standards. However, they come with a ‘rebuilt’ brand.

Is it legal to drive a salvage car?

No. When the vehicle is branded ‘salvage’, it is not allowed on the road, as it is written off for scrap. Therefore, the owner must apply for an upgrade in branding by getting a Safety Standards Certificate, which allows for the vehicle to be towed and repaired. After which it is inspected and may be branded as ‘rebuilt’ which is allowed on the road.

What is the process of certifying a car from ‘salvaged’ to ‘rebuilt’ status?

The vehicle must undergo inspection to ensure that it meets minimum safety standards after which the owner is issued a Structural Inspection Certificate. The certificate is then submitted to the Licensing department of the Ministry of Transportation. After acceptance, then the vehicle’s status is upgraded.

What are the taxes aligned on the salvaged vehicles?

It is nearly tax- free to import salvaged vehicles and import taxes barely apply as the parts do not meet the normal car conditions. However, proper consultation with the Registrar of Imported Vehicles will do, as the charges may differ per extent of the damage. Also, some cars that do not pass the admissible test may be rejected at the Canadian border by customs.

 

So do not hold back from indulging in salvage car purchase. It may be a blessing in disguise.

For more tips and preparation for your next buy visit www.mpiauction.com

 

Sources:

http://www.mto.gov.on.ca/english/vehicles/vehicle-branding-program-faq.shtml

http://www.cbsa-asfc.gc.ca/publications/dm-md/d19/d19-12-1-eng.html

https://www.ontario.ca/laws/regulation/020376/v1

http://www.tc.gc.ca/eng/motorvehiclesafety/safevehicles-importation-faq-before-import-1278.htm

Importing Used or Salvage Vehicles from the United States into Canada

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