What You Need to Know About Gifting a Car in Canada

Do you have an old car in mint condition sitting in your garage waiting for a new owner? Or maybe you've been shopping for a brand-new car for someone in your family? Regardless of whether a car is used or brand new, there's more to gifting a vehicle than simply handing over the keys. We've answered some commonly asked questions about gifting a car in Canada to give you a better understanding of what’s involved.

How does transferring vehicle ownership work and what are the requirements?

Typically, when transferring vehicle ownership you'll be expected to present some paperwork (e.g., form declaring the gift, proof of insurance, etc.) and your driver's license. The process of delivering that paperwork to your province's Ministry of Transportation varies depending on where you live. In some places you may be able to submit your transfer request online. Or, your province may require that both you and the vehicle recipient visit your local Ministry of Transportation together to complete the ownership transfer in-person.

In addition, some provinces may require extra documentation. For example, when gifting a car in Ontario, you'll be required to provide a Safety Standards Certificate, whereas other provinces don't require any inspection certification prior to transferring ownership of your vehicle.

After presenting the appropriate documentation, the recipient of your car may be required to pay Retail Sales Tax (RST) based on book value of the vehicle. RST is collected by the Ministry of Transportation during the ownership transfer process.

What if I want to gift a car to a family member?

If you want to gift a car to a family member, like your spouse, some of the required documents may be different than if you're gifting the car to someone else. For example, an Ontario Safety Standards Certificate isn't required for spouse-to-spouse transfers, but you do have to complete a Spousal Declaration.

Depending on your province, your family member may be exempt from paying retail sales tax (RST) to receive the vehicle – although each province has their own set of rules when it comes to their variation of retail sales tax (RST) and when it should be applied. Some provinces will allow you to give a car to an immediate family member, like a spouse, sibling, child, or grandchild RST-free, but only if it's the first vehicle being gifted within a 12-month period. If, however, you're gifting a car to anyone outside your immediate family, they'll be required to pay RST to complete the ownership transfer.

Check with the Ministry of Transportation in your province to understand which documents you need to complete the transfer of vehicle ownership and whether RST is required.

How do I insure a car that was gifted to me if I already have an existing car insurance policy?

If you're the recipient of a gifted car and you already have an active car insurance policy, you'll need to contact your insurer to add the gifted car to your existing policy. Ideally, you'll want to reach out to your insurance company as soon as possible to ensure your newly gifted car is protected against loss or damage as outlined in your policy.

If you're the one who's gifting a car, don't forget to contact your insurer to have the gifted vehicle removed from your policy. However, you'll want to make sure you have coverage until the ownership is officially transferred.

How do I insure a gifted car if this is the first vehicle I've ever owned?

If the gifted car is the first you've ever owned, you should prioritize getting a car insurance policy before the car ownership gets transferred into your name. Because car insurance is mandatory in Canada, you must show proof that you have car insurance coverage before you're able to register a vehicle. So where do you start? When you first start shopping for car insurance, you may feel inclined to look into cheap car insurance options. But you'll probably come to realize that although some policies may be less expensive, the coverage they offer may not be the most ideal. Rather than looking for "cheap" insurance, look for affordable options that can fit your budget. That way, you won't have to compromise on the coverage you need for you and your car.

Since this may be the first car insurance policy that you purchase for yourself, you'll need to ensure that you at least have the mandatory coverage required within your province. You may also want to look into adding enhanced coverage options to your policy to help protect your vehicle in a wider range of scenarios, like  Comprehensive coverageCollision or Upset, Specified Perils or All Perils coverage.

Although you may have scored a car at little to no cost, there are still other costs to factor in when owning a car — and they'll start adding up. While you may have no say in gas prices or maintenance costs, you can look into ways to save on your car insurance. Whether you're a new driver living at home who's receiving a gifted car from your parents, or you're an existing TD Insurance customer with a policy for homecondo or tenant insurance, you can take advantage of the bundling discounts we offer, such as our multi-product or multi-vehicle discounts, just to name a few.

To gift, or not to gift, that is the question.

Ultimately, whether you decide to gift your vehicle is up to you. If you want some money back in your pocket as a reward for taking good care of your car, selling it may be a good option. But if you're looking to save your child who's on a tight budget some extra money, gifting a car may be the better option. Keep in mind that tax exemptions for the recipient may only be applied if they're an immediate family member being gifted a car, not if they're purchasing a car from you.

Whether you're the buyer or receiver of the gifted car, make sure you have the best insurance coverage to suit your needs prior to the vehicle transfer. If you're an existing TD Insurance customer looking to update your policy with a newly gifted vehicle, you can do so through MyInsurance. Or, if you're looking to purchase your first car insurance policy with us, you can get a quote online in minutes.

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The content on this page is for general information purposes only and does not constitute legal advice. Coverages described herein may be subject to additional eligibility criteria, limitations and exclusions. In the event you make a claim, potential indemnification is also subject to the receivability of the claim and the type of coverage you bought.

In the case of conflict between the content on this page and your policy wordings, your policy wordings shall take precedence. Please speak to an Advisor or consult your policy wordings for further details.