Man in Surrey bought $1,200 car, but told to pay PST bill on $4,000 value

After searching for a car for about a month, and finally finding one to fix up, a Surrey man is now facing a tax bill for a car worth thousands of dollars more.

Sachin Goyal bought a used 2004 Volkswagen Passat for $1,200 over the Thanksgiving weekend. But when he went to register the car, he was told that he has to pay B.C.’s provincial sales tax (PST) on the wholesale value of $4,000.

As of October 1, the PST on a used car purchased in B.C. is calculated using the wholesale value of the vehicle and not the sale price. The province says the change was made in part to prevent tax fraud.

“I was totally shocked, I didn’t know about this new rule,” Goyal said.

“It’s like paying for something that I didn’t spend money on. So, I’m paying for like, $4,000, but I only spent $1,200,” he added.

Goyal says that along with 300,000 kilometres on the odometer, the car also has broken headlights, radio, and window buttons.

The engine is also in bad condition, with multiple check lights showing on the dashboard.

George Iny, the director of the Automotive Protection Association says that in trying to prevent fraud, it can lead to problems for buyers.

“In wanting to correct underreporting by buyers and sellers, the situation sometimes leads to the opposite [issue], which is overpaying tax,” Iny explained.

Sachin Goyal says his 2004 Volkswagen Passat has 300,000 kilometres on the odometer. (Monika Gull/CityNews)

Goyal says, “Maybe some people exploit the system and then maybe some people buy the car for let’s say $3,000 and write on the paper $100. I appreciate they want to save taxes but they have to find another way.”

The province says buyers can get an appraisal to lower the tax through a registered dealer or vehicle appraiser anywhere in Canada.

But Goyal says he’s reached out to several dealers, and none were willing to appraise his car.

He says that when he reached out to various dealers, he was told that they could do an estimate if he wanted to sell or trade in the car.

“I said, ‘no, I don’t want to sell, I don’t want to buy, I just want an appraisal value…and they said, ‘no, we don’t do that,'” Goyal explained.

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Iny says in Ontario and Quebec, because of the hassle of trying to get vehicles appraised, buyers usually end up paying tax on the wholesale price.

“The barriers to getting the [appraisal] done and the know-how that people have, which isn’t so great in those situations, as such that they just prefer to pay higher tax,” Iny said.

For Goyal, he says he will likely just end up paying the wholesale tax amount because he needs to use it.

“I have to go to work, I need that car, and it’s been sitting here for the last 4 to 5 days,” he said. “I’m also starting in university, things are getting so expensive, and then it’s hard for me to pay for each and everything.”

The province says qualified vehicle appraisers can be found online, and assessments can be done in person or remotely. It also says it can be done by a business outside of B.C.