Tax owing for vehicle?
 

Hey guys,

Just received a letter from Consumer Tax ministry and it is seriously bugging me. Was hoping someone can give me any advice or share their experience with this kind of issue. Thank you in advance!

Last year I bought a car from my childhood friend who had already left the country settled in the USA. The car was purchased brand new and registered in British Columbia, but he drove it to the USA with him and it was used there for a year or so. After some time in the USA he decided to buy a new car there and thought he no longer needed the car, so he agreed to sell it to me for very cheap(30% of "fair market value" according to some Gold Book). Money isn't really an issue for him and he didn't really care as we've known eachother and been through a lot in the past.
So he drove 5000km back to Vancouver from the east side of USA to drop off the car for me. We transferred the vehicle ownership to me and he left shortly after back to the USA. At the time I did not even give him any money since he agreed to let me pay it over the next few years in the form of online monthly payments.

Just last week I received a letter from the consumer taxation branch that says the private sale between me and my childhood friend has a tax owing since the car was sold at 1/3 of the market value. The letter also gives me 30 days to take actions or they would "decide" for me how much I bought the car for and make me pay more taxes on the second hand car.

I have searched all over google as well as the forums for a situation or a case similar to mine, but was not able to find any. The only documentation I have to show the ministry is my bank statement which shows the monthly payments I've been paying my buddy in the last 12 months. The amount that the ministry thinks I bought my car from my friend for would not be affordable to me anyways..

This is honestly not an attempt to not pay taxes, and I am more than willing to be paying the outstanding taxes-but only if it is justified.

Any advice would be much appreciated!

I don't have a personal experience with this, but IMO, just be honest with everything.

Prepare all the documentation you could (proof showing you guys are friend from childhood, signed declaration of your friend that the sale was bonafide/payment option and all the record of payments), go to tax branch, tell the exact story you posted and ask them if these would be enough. If not, what would be the appropriate document? (the most I can think of would be an affidavit from your friend as an even more formal form of declaration)

I was in almost the same situation as you. Except the car I bought was a leased car and had body damage and would be too expensive to fix and return, so the owner (company) sold to me at buyout price. I got this letter and they wanted the taxes owning since it was under market value. We took pictures of the damage and sent it in and it was approved. I would do what Hehe said and try, you got nothing to loose at this point.

i had a personal experience with this. you have to write them a letter claiming why the car was sold for under value, such as damage, problems or any other reason. have alot of documentation such as pictures and paper works.
i bought a car for about 9000 when most go for 16000, but the goverment claimed its value was 23000. I found many different car postings on craigslists as well. Brought up the fact that car needed some work etc.
send all the info in and hope for the best in your case.

gift letter? or is that too late

The BC transfer form has a place for the purchase price. What did you write there? You should have paid tax on that amount.