If you desk deals in Canada, the payment you quote depends heavily on where your customer lives. The same lease can carry 5% tax in Alberta, 13% in Ontario, and over 14% in Quebec, and some provinces treat trade-ins and rebates differently from the rest.
This guide walks through how province-based taxes affect a lease or purchase, with simple examples. It is a practical overview for brokers, not tax advice. Rates change, so confirm current rates with the CRA's GST/HST rate page and your province before you rely on them.
The three kinds of sales tax
Every province and territory charges the 5% federal GST. What changes is whether a provincial tax is added, and how.
HST (harmonized sales tax): one combined tax. Ontario is 13%, Nova Scotia is 14%, and New Brunswick, Newfoundland and Labrador, and Prince Edward Island are 15%.
GST plus a provincial tax: two separate taxes. BC adds 7% PST (more on expensive vehicles), Manitoba adds 7% RST, Saskatchewan adds 6% PST, and Quebec adds 9.975% QST.
GST only: Alberta, Yukon, the Northwest Territories, and Nunavut charge just the 5% GST.
How tax works on a lease
On a Canadian lease, you do not pay tax on the full price of the vehicle up front. Tax is charged on each monthly payment and on any cash down payment, at the customer's province rate.
Here is a simple hypothetical. A customer in Ontario has a $500 pre-tax monthly payment. HST at 13% adds $65, so the payment is $565. If they put $2,000 cash down, that carries $260 of HST. The same deal for a customer in Alberta adds only $25 a month and $100 on the down payment.
That is why the customer's address matters so much. In LeasingStack, entering the customer's postal code on the desk sets the province and the tax rate, and the quote shows the payment before and after tax.
Trade-ins on a lease
When a customer puts trade-in equity toward a lease, that equity generally is not taxed for GST, HST, QST, Manitoba RST, or Saskatchewan PST. It works like a tax-free cap cost reduction.
BC is the exception. BC PST is still charged on the trade-in value applied to a lease, so a BC customer pays PST that a customer in another province would not. BC's PST Bulletin 116 covers the details for dealers and leasing companies. The desk applies this rule automatically on BC deals.
Manufacturer rebates
Manufacturer rebates lower what the customer pays, but they do not lower the GST, HST, or QST. Tax is charged as if the rebate were not there.
BC PST works the other way: it is charged on the price after manufacturer rebates. Government EV rebates are different again and do not reduce BC PST. When you add a rebate on the desk, LeasingStack handles each tax the right way for the customer's province.
BC PST price tiers
BC PST on passenger vehicles is not a flat 7%. The rate rises with the purchase price, and the higher rate applies to the whole price, not just the amount above each threshold. The tier is set by the price before any trade-in.
Under $55,000: 7%
$55,000 to $55,999.99: 8%
$56,000 to $56,999.99: 9%
$57,000 to $124,999.99: 10%
$125,000 to $149,999.99: 15%
$150,000 and up: 20%
Zero-emission vehicles, including plug-in hybrids, stay at 7% until $75,000, then step to 8%, 9%, and 10% at $75,000, $76,000, and $77,000. These thresholds are in effect through February 22, 2027.
The federal luxury tax
New vehicles priced over $100,000 owe the federal luxury tax. It is the lesser of 10% of the price or 20% of the amount over $100,000. On a $120,000 vehicle, that is the lesser of $12,000 and $4,000, so the luxury tax is $4,000.
GST or HST is charged on top of the luxury tax. BC PST is not. The CRA explains which vehicles are covered in its guide to subject vehicles. In LeasingStack, the desk adds the luxury tax as its own line on new vehicles over the threshold and updates it when the price changes.
Fees and registration
Dealer fees, such as documentation or admin fees, are generally taxable at the province rate. Government registration and licence fees are not. On the desk, fees are taxed by default, you can turn tax off on any individual fee, and registration is never taxed.
A quick checklist for every Canadian deal
Run through this before you send a quote.
Is the customer's postal code entered, and does the province match where they live?
On a lease, is tax shown on the monthly payment and on the cash down?
Is there a trade-in on a BC lease? PST still applies.
Is there a manufacturer rebate? It does not lower GST, HST, or QST.
In BC, does the PST tier match the price before the trade?
Is the vehicle new and over $100,000? Add the federal luxury tax.
Are dealer fees taxed and registration left untaxed?
Is the quote in kilometres, with the right km residual band?
Let the desk do the math
Keeping all of this in your head on every deal is how mistakes happen. LeasingStack sets the tax from the customer's postal code and applies the lease, trade-in, rebate, luxury tax, and fee rules for each province, while letting you edit anything. Read what Canadian brokerages get, or start your 14-day free trial and desk a few real deals.
Frequently asked questions
Is a car lease taxed on the full price in Canada?
No. On a Canadian lease, tax is charged on each monthly payment and on any cash down payment, at the customer's province rate.
Which province has the lowest sales tax on vehicles?
Alberta, Yukon, the Northwest Territories, and Nunavut charge only the 5% federal GST, with no provincial sales tax.
Does a trade-in reduce tax on a lease in Canada?
In most provinces, trade-in equity applied to a lease is not taxed for GST, HST, QST, Manitoba RST, or Saskatchewan PST. BC PST is the exception and is still charged.
Do manufacturer rebates reduce GST or HST?
No. GST, HST, and QST are charged as if the manufacturer rebate were not there. BC PST is charged on the price after manufacturer rebates.
How is the federal luxury tax on vehicles calculated?
For new vehicles priced over $100,000, it is the lesser of 10% of the price or 20% of the amount over $100,000. GST or HST is charged on top, but BC PST is not.