Buying a bike - private sale and taxes question
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  1. #1
    Registered User Array
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    Buying a bike - private sale and taxes question

    Well, after my spectacular crash last season, I am 99% recovered and already looking for my next ride. I am eyeing a few used bikes on the various boards (craiglist list,etc).

    My question is re: buying a bike through a private sale and taxes.

    I checked with Cassell's - if it is a private sale, it is still subject to PST. But if you declare it as a "gift" - there is no tax on it. The catch is - if Gordie Campbell believes that a $5,000 bike is a gift (big fines if you are caught).

    Any other approaches to minimize the amount of tax on a private sale?
    (personally I hate to give more money to Gordie Campbell just to blow
    on more Olympic propoganda). Would the declared value be something that can be adjusted?

    Thanks!

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  3. #2
    +1 Array schmii's Avatar
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    you can declare any value of what you allegedly paid. If the value is beyond book value have an explanation but if you wreck it that's what you're getting.

    Trades are amazing to insure at value without paying taxes.
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  4. #3
    This space for rent Array Stiffler's Mom's Avatar
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    The tax owed is a function of the reported dollar value of the sale. In many cases, this is the actual dollar value of the sale, but not always.
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    Got Hammer? Array gixxstar's Avatar
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    You save $70 per $1000 that you manage to hide in a transaction. Hardly seems worth it.

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    Eh Muh Gawd Becky!! Array Purplekawi's Avatar
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    Be aware that you also have to declare a value for insurance purposes so if bike "X" is worth $5500 and you declare it and pay taxes on saaaaaaaay $3000, in the event of a theft or complete loss due to collision, you will only get your declared value of $3000 even though bike "X" is worth $5500. Not 100% sure but the gift idea is only feasible for family or spouse.
    Last edited by Purplekawi; 01-12-2010 at 02:23 PM.
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    Quote Originally Posted by Purplekawi View Post
    Be aware that you also have to declare a value for insurance purposes so if bike "X" is worth $5500 and you declare it and pay taxes on saaaaaaaay $3000, in the event of a theft or complete loss due to collision, you will only get your declared value of $3000 even though bike "X" is worth $5500. Not 100% sure but the gift idea is only feasible for family or spouse.
    Hmm...I'm not sure about that. When my car was written off they only looked at the market value of the car, not the declared value when I purchased it second hand. Yes, the purchase value was market value at the time, which was what was declared, but from what I could tell that did not figure into the calculations at all to determine payout value?

  8. #7
    Three hour tour guide Array silverD's Avatar
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    Quote Originally Posted by kivyee View Post
    Hmm...I'm not sure about that. When my car was written off they only looked at the market value of the car, not the declared value when I purchased it second hand. Yes, the purchase value was market value at the time, which was what was declared, but from what I could tell that did not figure into the calculations at all to determine payout value?
    Bikes are treated differently than cars/trucks.

    Like Gixxstar said, you won't save hardly anything by messing with what you really paid when you go to register it and pay the taxes and you could quite likely shoot yourself in the foot if you have to claim a loss with ICBC.

    There is no way you will get near what you really paid if you declare for taxes a low figure. Also be aware if you claim too low a value for taxes they will likely contact the seller to confirm the selling price. It happend to me when I was a seller.

    Not worth it for what you might save IMO, but each to their own.

    "gifting" between strangers will require an explanation as to why a total stranger is giving you a motorcycle.
    Last edited by silverD; 01-12-2010 at 04:02 PM.
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    BCSB Public Relations Array kerunt's Avatar
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    First of all, confirm your idea to declare a low price with the seller to make sure he will back you up if they call to confirm the price. But most of the time the seller will be right there next to you during registration transfer, so it won't even get to the call.

    - Declare your $5000 bike as $1000.
    - Their system will immediately throw a flag on the low price and you will be asked to fill out a piece of paper explaining why.
    - Write down a bunch of imaginary mechanical problems: tranny is gone, engine problems, bike stalls randomly, stator issues, worn out tires, etc.
    - Come back to ICBC the next day and update your policy with the proper declared value (you've now fixed all issues with the bike ).

    Easy.
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  10. #9
    Hurtin Albertian Array PS94's Avatar
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    Could one not trade them, say, a priceless rubber bouncy ball, for the majority of the purchase price? then the declared value of the machine would still be high, but cash on paper changing hands would be low?

    Just a thought, I'm from AB, and we don't have that issue...

  11. #10
    Three hour tour guide Array silverD's Avatar
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    Quote Originally Posted by kerunt View Post
    First of all, confirm your idea to declare a low price with the seller to make sure he will back you up if they call to confirm the price. But most of the time the seller will be right there next to you during registration transfer, so it won't even get to the call.

    - Declare your $5000 bike as $1000.
    - Their system will immediately throw a flag on the low price and you will be asked to fill out a piece of paper explaining why.
    - Write down a bunch of imaginary mechanical problems: tranny is gone, engine problems, bike stalls randomly, stator issues, worn out tires, etc.
    - Come back to ICBC the next day and update your policy with the proper declared value (you've now fixed all issues with the bike ).

    Easy.
    Hmm, while that sounds like an interesting thought, I'm pretty sure you are not the first to think of it and ICBC will be asking and looking for proof to back up the "new" value. But give it a shot and let us know what happens.. I'd be interested to see if you get away with it.
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  12. #11
    Eh Muh Gawd Becky!! Array Purplekawi's Avatar
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    Quote Originally Posted by kerunt View Post
    First of all, confirm your idea to declare a low price with the seller to make sure he will back you up if they call to confirm the price. But most of the time the seller will be right there next to you during registration transfer, so it won't even get to the call.

    - Declare your $5000 bike as $1000.
    - Their system will immediately throw a flag on the low price and you will be asked to fill out a piece of paper explaining why.
    - Write down a bunch of imaginary mechanical problems: tranny is gone, engine problems, bike stalls randomly, stator issues, worn out tires, etc.
    - Come back to ICBC the next day and update your policy with the proper declared value (you've now fixed all issues with the bike ).

    Easy.
    This does work but there's one possible glitch and I've had to do this before....they MAY request you provide receipts for the repairs done to prove you didn't just declare a cheap value for taxation purposes. Hit and miss I guess.
    That that doesn't kill us forces us to live with a busted up bike!!

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    BCSB Public Relations Array kerunt's Avatar
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    Quote Originally Posted by silverD View Post
    Hmm, while that sounds like an interesting thought, I'm pretty sure you are not the first to think of it and ICBC will be asking and looking for proof to back up the "new" value. But give it a shot and let us know what happens.. I'd be interested to see if you get away with it.
    Quote Originally Posted by Purplekawi View Post
    This does work but there's one possible glitch and I've had to do this before....they MAY request you provide receipts for the repairs done to prove you didn't just declare a cheap value for taxation purposes. Hit and miss I guess.
    Well... I "know a guy" who did that with his first car purchase and it worked .

    Realistically though... you had all the necessary parts sitting in your garage (you bought them at a scrap yard, for cash; no receipts) and did the work yourself. What kind of proof could they want? Send them pictures of the bike taken apart .
    "Yamaha" - it's Japanese for "fuck your sports car."

  14. #13
    Registered User Array Commuter Boy's Avatar
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    Quote Originally Posted by kerunt View Post
    - Declare your $5000 bike as $1000.
    - Their system will immediately throw a flag on the low price and you will be asked to fill out a piece of paper explaining why.
    - Write down a bunch of imaginary mechanical problems: tranny is gone, engine problems, bike stalls randomly, stator issues, worn out tires, etc.
    - Come back to ICBC the next day and update your policy with the proper declared value (you've now fixed all issues with the bike ).

    Easy.
    This works, but only if you have something in your banking records that verifies what you say you bought the bike for and that the seller doesn't mess up when they ask him what he got for it.

    For example, you cut the seller a $5,000 cheque for the bike and claim it was $1,000. Either of you having to prove the sale price is hooped, and the seller won't be the one they go after, he'll just claim you filled out the dollar amount after he gave you the keys and walked away with the money.

    If you cut a cheque for $1,000 and on the same day take out $4,000 in cash and he deposits $5,000 in his bank account that day and you show $4,000 in withdrawals you're back to the same problem.

    Don't forget you now have to declare to your bank the reason for large withdrawals of cash too.

    It's getting not worth it anymore.

  15. #14
    Eh Muh Gawd Becky!! Array Purplekawi's Avatar
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    Quote Originally Posted by kerunt View Post
    Well... I "know a guy" who did that with his first car purchase and it worked .

    Realistically though... you had all the necessary parts sitting in your garage (you bought them at a scrap yard, for cash; no receipts) and did the work yourself. What kind of proof could they want? Send them pictures of the bike taken apart .
    I'm not saying it doesn't work I'm just not going to tell someone to do it and have them encounter what I've experienced on a couple of occasions. I've purchased repairable vehicles both 2 and 4 wheeled before and filled out and signed the documents stating why I paid less than fair market value and in all but 2 instances, it went through no problem but on one occasion I had to prove why the bike was $2000 less and produce receipts and such to prove the repairs were done and in the other instance, I had to take the vehicle through an inspection before they'd let me register it to prove it had been repaired and road worthy. I found that if the vehicle was within a thousand or so of fair market value, I signed the paper and was on my way.
    That that doesn't kill us forces us to live with a busted up bike!!

  16. #15
    BCSB Public Relations Array kerunt's Avatar
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    Quote Originally Posted by Commuter Boy View Post
    This works, but only if you have something in your banking records that verifies what you say you bought the bike for and that the seller doesn't mess up when they ask him what he got for it.

    For example, you cut the seller a $5,000 cheque for the bike and claim it was $1,000. Either of you having to prove the sale price is hooped, and the seller won't be the one they go after, he'll just claim you filled out the dollar amount after he gave you the keys and walked away with the money.

    If you cut a cheque for $1,000 and on the same day take out $4,000 in cash and he deposits $5,000 in his bank account that day and you show $4,000 in withdrawals you're back to the same problem.

    Don't forget you now have to declare to your bank the reason for large withdrawals of cash too.

    It's getting not worth it anymore.
    I can see the logic in that, but ICBC doesn't have access to your bank records (or the seller's).

    Quote Originally Posted by Purplekawi View Post
    I'm not saying it doesn't work I'm just not going to tell someone to do it and have them encounter what I've experienced on a couple of occasions. I've purchased repairable vehicles both 2 and 4 wheeled before and filled out and signed the documents stating why I paid less than fair market value and in all but 2 instances, it went through no problem but on one occasion I had to prove why the bike was $2000 less and produce receipts and such to prove the repairs were done and in the other instance, I had to take the vehicle through an inspection before they'd let me register it to prove it had been repaired and road worthy. I found that if the vehicle was within a thousand or so of fair market value, I signed the paper and was on my way.
    Right. If I remember correctly, the ICBC person told me the flag comes up if the value you're declaring is more than 20% under the market value in their system.
    "Yamaha" - it's Japanese for "fuck your sports car."

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