Retail Sales Tax
The Retail Sales Tax is levied on the private transfer of designated property including a motor vehicle, snow mobile or ATV, pleasure craft, or aircraft. The tax is payable is situations where the person transferring the title or possession of the designated property is not HST registered.
The Retail Sales Act, enacted with the implementation of Harmonized Sales Tax (HST), requires the purchaser to pay the Retail Sales Tax at the HST rate of 15 percent.
How do I pay the Retail sales tax?
Retail Sales Tax is payable on the 20th day of the month following the transaction date unless it is a vehicle required to be registered under the Highway Traffic Act.
You will pay the tax on a vehicle when you first register or license it in PEI or on the 20th day of the month after the vehicle was purchased or brought into PEI, whichever date is first.
When you remit the tax directly to the Minister of Finance, i.e. on designated property other than a vehicle, you must include a completed self-declaration and a copy of the bill of sale with your payment. Retail Sales Tax (RST) Self Declaration.
How do I calculate the amount of tax due?
Motor vehicle: The amount of tax payable on designated property as a motor vehicle is the greater of the following amounts:
- Declared purchase price supported by the bill of sale or similar document;
- Average wholesale value as set out in the Canadian Red Book or the Canadian Sport Vehicle Blue Book; or
- Prescribed book value in writing from an authorized vehicle appraiser such as a registered motor vehicle dealer with Class A or Class D licence under the Dealer’s Trade Regulations (Class E licence for snow vehicles or ATVs) or an appraiser authorized by the tax commissioner. To be recognized for Retail Sales Tax purposes, the vehicle’s value must be appraised within 90 days of purchase date.
If the vehicle was acquired by means other than a purchase, the tax is due on the declared fair value.
Other designated property: In general, the declared taxable value of designated property other than a motor vehicle is the purchase price recorded on the bill of sale or similar document plus shipping or delivery charge.
If the Tax Commissioner determines the purchase price, declared value or appraised value of any designated property to be less than actual fair value, the additional tax plus interest may be levied.
What transactions are exempt from Retail Sales Tax?
Designated property transferred to another person or brought into the Province may be exempt from Retail Sales Tax when it meets the definitions for:
- Settler’s Effects: Designated property owned for personal, not-commercial use by individuals who move to PEI from another province may be exempt from tax providing the person:
- Takes up residence immediately after residing outside PEI
- Resided out of province a minimum six consecutive months (three months for students)
- Owned the designated property at least 30 days prior to taking up residence; and
- Brought it to PEI within six months of taking up residence in PEI.
- Family Transfer (private transfer of a vehicle): When a person transfers their vehicle to an immediate family member it is taxable on the stated purchase price without reference to the value in the Canadian Red Book or Canadian Sports Vehicle Blue Book, providing:
- The seller owned the vehicle at least 12 months or, when they acquired it, paid all required sales taxes on the greater of the purchase price or book value of the vehicle.
- The transfer is between the individual and a member of their family, i.e. spouse, child or grandchild, parent or grandparent, in-law or step-relationship. (A common-law relationships must exist minimum six months prior to transaction to qualify.)
- The vehicle was not transferred within the 12-month period preceding the current transaction.
- Both the seller/donor and the purchaser/recipient sign under witness of a “Commissioner of Taking Oaths” a completed Sworn/Affirmed Statement for a Family Transfer of Designated Property.
- Inheritance: A vehicle and other designated property acquired through an inheritance is not subject to Retail Sales Tax regardless of the deceased owner’s former residence providing the recipient is named in the will and receives the property as part of the distribution of the deceased’s estate. The following documentation is required:
- Copy of the will identifying the designated property;
- Sworn statement from the executor authorised to dispurse the assets; and
- Certificate of death.
- Marriage Breakdown: Designated property is exempt from Retail Sales Tax when it is transferred to a spouse or former spouse under a written separation agreement, marriage agreement or court order on the dissolution of marriage or common-law relationship.
- First Nations: When a Status Indian purchases and takes delivery of the goods on a Reserve in Prince Edward Island, the goods are exempt from Retail Sales Tax. (Confirm Status Indian and Reserve are considered correct language in 2022.)
- Commercial Fishing Boats: Boats purchased by a commercial fishers are exempt from Retail Sales Tax providing they are used in commercial fishery and for no other purpose.
How would I qualify for retail sales tax refund?
You may request a refund of retail sales tax paid to the Province of PEI in the following situations:
- You pay retail sales tax on designated property you purchase in PEI and then permanently remove it to another province or territory within 30 days of purchase. Proof of tax paid to the other province is required.
- You pay retail sales tax on designated property exempt from tax, i.e. a boat used only for commercial purposes.
- You pay retail sales tax in error or in excess of the amount payable. You must apply for refund within four years of the date of overpayment.
Submit with proper documentation a completed Request for Refund of Retail Sales Tax (RST).
Disclaimer: This page is prepared for information purposes only and should not be considered a substitute for the applicable statutes. Should there be any conflict between the contents of this page and the statutes, the statutes shall prevail.