What is the Ruling on Paying Car Sales Tax on a Privately Used Vehicle?

Answered by Mawlana Ilyas Patel

Question

I bought a car from a friend in a private sale. I paid $13,800 for it. In Ontario, when I register the vehicle in my name, a tax of 13% is applied to the sale price. In the Official Ontario Used Vehicle Information Document, the car’s value is $0 (which is unusual). So when I register the car, I will be asked how much I paid for it.

So my question is, can I lie in this case and tell them an amount lower than $13,800 to avoid tax since the Official Ontario document lists its value at $0?

Is applying so much tax each time the car is sold fair? I’ve heard that car dealerships lobbied for this, as mentioned in the following article:

https://www.theglobeandmail.com/drive/mobility/article-why-should-i-have-to-pay-taxes-on-a-used-car/

Answer

I pray you are in good faith and health. Thank you for your question.

This is the law of the province you reside in, and you will have to pay. You may arrange a gift scenario where you may be exempted by mutually agreeing it to be a gift, etc. Also, the document lists its values at $0 in your case. See the link below.

As major contemporary scholars have answered, it is not permitted to lie or deceive to avoid taxes. At the same time, it is allowed to take all lawful means to reduce or even avoid taxes.

This would correspond to the fact that two things not allowed for Muslims in their dealing, even with non-Muslims, are lying and deception. This involves both.

Believers Have Many Temperaments, Except Dishonesty

Abd al-Rahman ibn Yazid (Allah be pleased with him) reported that Abdullah ibn Masud (Allah be pleased with him) said, “The believer may have all kinds of natural dispositions flowing throughout himself, except for deception and lying.” [Al-Iman, Ibn Abi Shaiba]

I would like you to go through the valuable answers and links below. You will receive guidance and direction in sha Allah.

Related

• How Much Tax Do You Pay on a Used Car in Ontario? (thinkinsure.ca)
• Deception, Cheating, & Concern – Birgivi’s The Path of Muhammad Explained – Sh. Faraz Rabbani – YouTube

Why not begin your search for knowledge by signing up for a course on SeekersAcademy (seekersguidance.org)?

I pray this helps with your question.

[Mawlana] Ilyas Patel
Checked and Approved by Shaykh Faraz Rabbani

Mawlana Ilyas Patel is a traditionally-trained scholar who has studied within UK, India, Pakistan, Syria, Jordan and Turkey.

He started his early education in UK. He went onto complete hifz of Qur’an in India, then enrolled into an Islamic seminary in UK where he studied the secular and Alimiyyah sciences. He then travelled to Karachi, Pakistan.

He has been an Imam in Rep of Ireland for a number of years. He has taught hifz of the Qur’an, Tajwid, Fiqh and many other Islamic sciences to both children and adults onsite and online extensively in UK and Ireland. He was teaching at a local Islamic seminary for 12 years in the UK where he was a librarian and a teacher of Islamic sciences.

He currently resides in UK with his wife. His personal interest is love of books and gardening.