‘It’s ludicrous’: Salmon Arm man resists new rules for private vehicle sales in BC

Chris Lethbridge is taking a stand against ICBC and the BC government after being told he owes sales tax based on an $11,000 estimate for a used truck that cost him $2,100.

The Salmon Arm man said he purchased the truck, a 2008 Dodge with about 300,000 kilometers on it, in a private sale in October.

“We did the deal in the insurance office and as soon as I made the deal, they said that truck is worth $11,000, you owe taxes on $11,000…” said Lethbridge.

“I’m not paying about $1,300 in taxes on a vehicle I paid $2,100 for. It’s ludicrous.”

In February, the BC government announced it was changing tax rules to prevent tax avoidance by people selling used vehicles privately.

“This approach would align BC’s treatment of private vehicle sales with the majority of other provinces and is intended to address tax avoidance arising from the under reporting of the price of motor vehicles from private sales,” explained the province. “The measure will not apply for motor vehicles involved in a trade-in.”

The changes came into effect on Oct. 1. Now, at the time of registration, the average wholesale value of a vehicle is determined using the Canadian Black Book valuation guide. If the average wholesale value is greater than the price paid, the average wholesale value is used to calculate what is owed for provincial sales tax.

Lethbridge said he called two other ICBC offices and received different quotes on his truck, one at $8,300 and another at $13,500. Meanwhile, he said the two other guides used to determine a vehicle’s value, Edmunds and the Kelley Blue Book, estimate his truck to be worth anywhere from $3,200 to $8,500.

Lethbridge said he was also informed that if his truck, once registered and insured, were to be in an accident and written off, it’s unlikely his payout would be based on the $11,000 estimate.

“Oh no, no, we’ll have to do an estimate and appraisal on the vehicle to find out what it’s worth,” said Lethbridge. “And you can guarantee they’ll go to Edmund’s book where the truck is only worth three grand.”

Currently, Lethbridge’s work evaluating commercial vehicle drivers has him traveling to Revelstoke. He’s borrowing his dad’s vehicle for this, while his truck remains parked, uninsured and unregistered. He said he’s already put about $2,000 of work into the vehicle, and it needs at least another $3,300 plus the cost of tires.

Lethbridge said he could challenge ICBC’s evaluation of the truck, but would have to pay to have an assessment done.

150 Mile resident Graham Hugill is going through the same thing. A truck he bought for $35,000 through a private sale sits parked, unregistered and uninsured at his home after he was told by ICBC the vehicle is worth $47,240.

“That’s $12,240 that I didn’t spend so why am I paying tax on it?” said Hugill, who has taken his own stand against ICBC and the province with a petition on change.org titled STOP THE TAX GRAB New Used Vehicle Tax imposed on British Columbians is Gouging Us. Hugill noted he is not looking for donations, just signatures.

Shuswap MLA Greg Kyllo said he has received a number of calls regarding taxation on used vehicles.

“The real challenge here is that the government has taken an approach that all used car buyers are somehow tax cheats,” said Kyllo, noting that it has always been within ICBC’s power to audit or challenge transactions. Instead, the buyer now shoulders the burden of having to prove a vehicle’s value.

“Again, this is a government that’s taking the premise that everybody is a tax cheat so you will pay your taxation based on a number we take out of a book without giving consideration of the transaction between the two individuals.

“Imagine if you went to Best Buy and you suddenly are going to be taxed not on the item’s sale price, but on what the manufacturers suggested retail price is. That’s basically what the government is doing,” said Kyllo.

Kyllo said a private members bill tabled by the BC Liberals three weeks ago would have largely remedied the NDP’s used car tax assessment bill, but it was ignored.

Asked what course of action people have, Kyllo advised writing to the BC government.

“We do have a new premier who was just sworn in on Friday. Maybe the new premier might have some heart and act on changing this legislation.”

Lethbridge said he plans to be a thorn in the side of the BC government and ICBC.

As for his truck, he welcomes ICBC to pay for the cost of fixing it up to its assessed value.

“If ICBC wants to say this truck is worth $11,000… they can pay to bring this truck up to $11,000 and I will gladly pay the taxes on it.”

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