I stumbled upon something while shopping for a car. When leasing a car, the government only treats your lease payments as your "purchase price" and that's what you pay PST for. So if you lease a $60k car with buyout of $30k, you only pay 7% PST in your payments, and 7% on the buyout if you choose to buy out the car. If you were to pay the full $60k, you get charged 10% PST. On a $60k car, that 3% is an extra $1800. Depending on the interest rates, even if you were looking to fully buy a car, leasing might be a good option, especially if leasing is a low rate like 0.9%.
This will probably be more prominent when the government be increasing the luxury tax in April. Lease a $150k car with a buyout of $75k, instead of 25% tax, you now pay 10%.
I'm so surprised no one has mentioned this, I searched and only found one article from Kelowna.
https://www.kelownanow.com/news/news...se_or_finance/
Quote:
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Finally, when leasing in BC you save the luxury tax at the end of the term, should you choose to buy.
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https://www2.gov.bc.ca/assets/gov/ta...-companies.pdf
Quote:
You calculate the PST payable on down payments, lease payments and other charges (i.e. the
lease price) that your customer pays to use the vehicle based on the following formula:
PST payable = Applicable PST Rate x Lease Price
The lease price does not include:
The GST
An option-to-purchase (lease buyout) as described in Option-to-Purchase (Lease Buyout)
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EDIT: Actually I think the Kelowna article might be wrong cause it says
Quote:
The applicable PST rate for passenger vehicles leased in BC depends on the vehicle’s tax
rate value. Generally, the tax rate value for a passenger vehicle is the fair market value of the
passenger vehicle on the first date you (the lessor) lease the passenger vehicle under an
agreement. To determine the rate, see PST Rates above.
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Oh wells, got excited for a while.