Cars are as essential to our daily lives in Ontario as social media and a hot beverage are to our morning routine. In fact, it is more difficult to try and name friends or family that don’t actually utilize a car in their day to day travels. In 2017, Ontario had the highest number of road motor vehicles registered at 8.7 million.
But what does car ownership really mean? And how does transferring car ownership in Ontario work when we decide to either gift or sell it? Let’s go through what car ownership entails, how to transfer car ownership to a family member, and what we need to do to prepare the permit transfer when we sell the car to a third party.
What does car ownership mean in Ontario?
When taking possession of a vehicle, whether you’ve bought it from a dealership or through a private sale, you will likely be given a green document once the transfer process has been completed. It is commonly referred to as the “vehicle title” or “vehicle permit.” This permit is used as proof of ownership. It will include information such as the VIN (vehicle identification number), make and model of the car, the name and address of the owner, the licence plate number and the sticker expiration date. Legally, you are required to carry this permit with you at all times while driving. Most drivers keep their permit in the glove box or centre console of the vehicle for easy access in case of an accident or if requested by police.
What documents will I need to transfer the permit?
If you decide to gift the vehicle to a family member or decide to sell the vehicle, it is best to have the following paperwork in order:
- proof of your Ontario vehicle insurance
- your Ontario driver’s license
- Safety Standards Certificate (if you are selling the vehicle and not transferring the vehicle to your spouse)
- Spousal Declaration (if you are transferring the ownership to a spouse and not selling it to a third party)
- Vehicle Ownership Permit with the completed portion on the back
- If you are also transferring the license plate (only permitted between spouses, parents and children), you will need a completed Plate Transfer Declaration
- a completed Sworn Statement for a Family Gift of a Used Motor Vehicle in the Province of Ontario form
- Emissions test results
Gifting a vehicle to a family member
While a much less complicated process than selling a vehicle to a third party, transfer of ownership to a family member does require a few essential steps. You can transfer ownership of your vehicle in Ontario to a family member without requiring them to pay retail sales tax (RST), but it can only take place once per 12-month period.
Who qualifies as a family member for this exemption? Here is a list of those eligible from ontario.ca:
- spouse (including a common-law spouse)
- parent or step-parent
- grandparent or step-grandparent
- son or step-son
- daughter or step-daughter
- grandson or step-grandson
- granddaughter or step-granddaughter
- half siblings (siblings with a common parent)
- adopted siblings (siblings with a common parent through adoption)
Can a car be registered under two names in Ontario?
Yes, a joint ownership of a vehicle is possible. The two parties can be family, friends or colleagues. In this, both names will be used on the permit and on any other paperwork, such as transfer of ownership.
Transferring ownership when selling a vehicle
Before entertaining offers, there are a few details that need to be taken care of when you transfer car ownership in Ontario:
- Used Vehicle Information Package (UVIP): This package contains the vehicle details, including the year, make, model, color body type, cylinders and power.
- Make sure that the Vehicle Identification Number (VIN) on your vehicle matches the number on your permit (your green ownership document).
- Check to ensure the vehicle has no money owing on it. Cars with a lien or outstanding debt can have the ownership transferred, but not without risk. If the lien is not paid, the debt holder has the right to repossess the vehicle from the person who owes the money (seller) OR from the buyer of the car.
Always check for the lien information on the Used Vehicle Information Package! Once you have found your buyer and have a mutually-agreed upon sale price, it is now your duty to hand over the UVIP, making sure to complete the information on the package.
You must also complete and sign the Application for Transfer located on the back of the “vehicle portion” of the permit (registration) and give it to the buyer. You must write down the name and address of the buyer, record the mileage, indicate the date of sale and sign the form. Be sure to keep the “plate” portion of the ownership for your own use. Additional notes include:
- Remove your license plates from the vehicle. Remember, plates travel with the driver, not the vehicle. Make sure you keep the “plate portion” of your permit (ownership), as well. You will need this if you want to register your plates on another vehicle.
- Transfer funds. Cash and bank drafts that are delivered in person are the best and most secure forms of payment when privately selling your used car. Avoid personal cheques or wire transfers, as these are more susceptible to fraud.
How is the vehicle permit important to insurance and accidents?
The vehicle permit is especially important when making insurance claims as the compensation goes to the person listed as the owner of the vehicle. Another little known fact, the prior owner (seller) of the car holds the legal liability for the vehicle until it is completely processed by the buyer at Service Ontario.
Should I have a contract for selling the car?
Yes. You are making a legal sales transaction. A bill of sale is a type of sales receipt. For private sales, it details the transaction between a buyer and seller. In the case of a car sale, it acts as proof of ownership transfer. They are both sales receipts and proof of purchase from your transaction.
What happens if vehicle ownership is lost?
Unfortunately, with the hustle and bustle of our busy lives, we can occasionally misplace important documents. You can replace lost, damaged or stolen vehicle ownership papers at any Service Ontario branch office. Be sure to bring identification, your driver’s license, your VIN and proof of insurance with you. A fee of $32 will be charged for their production.
When must the transfer of car ownership in Ontario be complete?
The buyer must register their name as the new owner of the vehicle within 6 days of the purchase. To register the vehicle, you need to visit a Service Ontario centre and bring the following: proof of insurance and your Ontario driver’s license.
Will there be tax to pay on a gifted vehicle?
In Ontario, there is no gift tax when gifting a car to a family member. However, this does exist in places like the United States.
It’s important to remember that until the vehicle transfer process is completed by the buyer at Service Ontario, it will remain registered in your name and any legal liability, for it remains with you. To ensure smooth transferring of car ownership in Ontario, make sure to follow up with buyers to ensure that they have successfully registered the car. Be sure to also keep records for future reference. Always check in with your isure broker before entering into a private sale or gifting of a vehicle to make sure you have all the relevant information and facts!