Gifting a Car In Ontario: How to Transfer Ownership to a Family Member
Wondering how to gift a car in Ontario? Maybe you’re feeling generous, have an older vehicle sitting unused in the driveway, or you’re upgrading your current car and feel like helping out someone close to you.
Whatever the reason, gifting a car in Ontario isn’t as simple as slapping a bow on the hood and tossing the keys to a lucky family member. There are some specific steps you need to take in order to properly transfer ownership.
Here’s a simple step-by-step guide to walk you through gifting a car in Ontario.
The financial benefit of gifting a car in Ontario
The most obvious benefit of gifting a car is the recipient doesn’t have to pay you for it. This makes it a great way to help someone out, such as a student who can’t afford their first car. But the benefits of giving a car as a gift extend beyond the $0 price tag.
When you gift a car to an eligible person in Ontario, that person isn’t required to pay retail sales tax (RST) on the value of the vehicle. RST is based on the Canadian Red Book value of the vehicle and it’s typically required when a vehicle’s ownership is transferred from one individual to another. By gifting a car, the recipient of the vehicle can save a considerable amount of money.
Additionally, there’s no gift tax in Canada like there is in the United States. So when you gift a car to an eligible person in Ontario, you’re truly giving it away for free.
On that note, it’s important to keep in mind whether the person you’re gifting a car to can afford the added costs that come with it, such as car insurance, maintenance, gas, parking fees, and so on. While the gift of a free car might seem like a big help in the short term, the recipient should ensure that they can manage any of the financial obligations that come with ownership.
Who is eligible to receive a gifted car / ownership transfer in Ontario?
In Ontario, you can only gift a vehicle (transfer ownership without the recipient paying RST) to certain family members. These include a spouse or common-law partner, parent or step-parent, grandparent or step-grandparent, child or step-child, grandchild or step-grandchild, in-laws, sibling, half-sibling, or adopted sibling.
If you want to gift a vehicle to a non-family member, the process is similar but the recipient will need to pay RST on the Canadian Red Book value of the vehicle—just as if you were selling the car privately.
6 steps for gifting a car in Ontario
Before you shout “surprise!” and hand your car keys over to your surprised grandson with a wink, there’s a few things you need to do first. Follow the steps below to ensure you’re in a position to gift a car in Ontario. Once you check off the below steps, you should be ready to visit a ServiceOntario location and transfer ownership.
1. Pay off the remaining car loan balance
You can’t gift a car (or transfer ownership) unless you fully own it. So before you can think about gifting your car to a family member, you need to make sure you’ve paid off any remaining balance on your car loan. Once you’ve done that, you’ll have a clean car title with no liens, meaning you’re free to transfer ownership to another individual.
If you’re paying your remaining car loan off around the same time you want to gift the car to a family member, you might want to request a lien release from the lender once you’ve paid off the vehicle. This will help ensure there’s no delay between when you paid off the loan and when the lien is removed from the car title.
2. Organize auto insurance (for the recipient)
In Ontario, any person who receives a car can only register the vehicle after they have insured it. At ServiceOntario, you will be asked for proof of insurance from a licensed provider.
3. Complete a Sworn Statement for Family Gift form
One of the required documents when gifting a vehicle in Ontario is a sworn statement that the car is a family gift and the recipient is an eligible family member. It’s a simple form that can be downloaded from the Government of Ontario’s website, or picked up in person at a ServiceOntario location.
To complete this form, you and the recipient will both need to sign it in front of a lawyer or notary public.
4. Have your Vehicle Ownership Permit ready
Your ownership permit is a green piece of paper with your vehicle registration information on it. You’ve likely kept this in your vehicle’s glove compartment. On the back of the permit you’ll find the transfer portion. You’ll need to bring this with you to a ServiceOntario location when you’re ready to transfer ownership of the vehicle.
5. Obtain a Safety Standards Certificate
If you’re gifting the car to another family member, you’ll need to provide a safety standards certificate that proves the vehicle meets minimum safety standards. This can be obtained by having the vehicle pass inspection at any MTO (Ministry of Transportation Ontario) licensed inspection station in Ontario.
This step can be skipped if you’re gifting the vehicle to your spouse, although they’ll need to complete a spousal declaration form.
6. Complete a plate transfer declaration
If you’re gifting the car to your spouse, a parent, or a child, you have the option of transferring the license plate or getting a new plate. To transfer the plate, you’ll need to complete a plate transfer declaration form. If you’re gifting the car to a family member other than your spouse, a parent, or a child, you cannot transfer the license plate.
If you decide to get a new plate or need to replace a stolen or damaged one, you’ll be required to pay an extra $27 on top of the permit cost at ServiceOntario.
What to bring with you to ServiceOntario
If you’ve completed the above steps and think you’re ready to hand over the keys and transfer ownership, it’s time to head to a ServiceOntario location.
In addition to the forms listed below, don’t forget to bring driver’s licenses for both you and the vehicle’s recipient, proof of valid Ontario vehicle insurance, and a method of payment for the permit ($32, or $59 with a new license plate).
Forms checklist
As a recap, here’s a checklist of the forms and documents you’ll need to bring with you to a ServiceOntario location when you’re gifting a car to a family member:
- Driver’s license
- Proof of vehicle insurance policy in the recipient’s name
- Completed sworn statement for family gift form (signed by both you and recipient in front of a lawyer or notary public)
- The transfer portion of your Vehicle Ownership Permit
- Safety Standards Certificate (or spousal declaration form)
- Completed plate transfer declaration
Sell your car online
If you decide not to gift your car or go through the hassle of selling it privately, selling it to Canada Drives requires far less effort. We’ve made the process as simple and easy as possible. Plus, it all happens online. There’s no need to visit a dealership or meet privately with interested buyers.
Get an instant offer for your car online here. If you are happy with your offer simply drop off your vehicle at a Canada Drives location near you and get paid! No more wasting time with tire-kickers and no-shows.
If you are in the market for a new vehicle you can get pre-approved for a car loan online in minutes. Canada Drives is the easiest way to buy or sell a car!
