Writing A Bill Of Sale For A Used Car

When buying a used vehicle, you may be most concerned about the purchase price, odometer reading, and sales tax but don't forget about the bill of sale. This important form is an integral part of the transfer of ownership of a used car, whether you're the buyer or seller.

A bill of sale in Ontario isn't a standardized form like many other car ownership documents, so it's often a point of confusion. But don't stress. By understanding the significance of this form and what it must contain, you can turn a potential hurdle into a seamless, stress-free transaction.

Why You Need a Bill of Sale in Ontario

Although buying and selling vehicles is different throughout Canada, a bill of sale — similar to a sales receipt — is a vital document for the purchase or sale of a used vehicle in Ontario for numerous reasons: registration, transfer of ownership, and sales tax. As a result, you'll always need to produce a bill of sale whether you're selling or buying a vehicle. Here's why.

Registration

In Ontario, the buyer of a used vehicle must register the car within six days of the purchase date. Registration cannot take place without a valid bill of sale.

Transfer of Ownership

A bill of sale is also vital when selling or buying a motor vehicle because it signifies the transfer of ownership from the legal owner to the buyer. Without the bill of sale and a signature from the seller, a new owner can't legally claim rights to the car.

Sales Tax

Every bill of sale in Ontario will have a section that asks for the purchase price or selling price of the vehicle. This figure determines the amount of taxes the buyer pays. For a private sale, it's known as retail sales tax (RST). For a commercial sale, it's called a harmonized sales tax (HST).

While both tax rates are 13%, the tax amount is based on either the purchase price or the wholesale value determined by the Red Book in the UVIP (used vehicle information package), whichever is greater.

Illustration of a bill of sale, Carfax report and VIN

What To Include in a Vehicle Bill of Sale in Ontario

Despite its importance in the purchase or sale of a used vehicle, a bill of sale is a straightforward document as long as it includes the correct and necessary information. The reason that it's relatively foolproof is that the bill of sale is included in the UVIP — the document you must legally present to a buyer.

If you go through the UVIP page-by-page, you're certain to see the bill of sale that a buyer needs in order to register the car and pay taxes. But UVIPs aren't required in every Canadian province.

For example, if you were to buy a vehicle from a private seller in Alberta or New Brunswick, you need to know what goes on a bill of sale to ensure you don't have to make the long, arduous drive back to get another one.

Once you have a bill of sale in hand, make a copy for your own records as well as a backup in case you lose the original.

Note: If a car is being sold as-is, the bill of sale won't look any different. However, the seller makes no guarantee on the fitness of the vehicle. As a result, you'll need to obtain a Safety Standards Certificate (SSC) on your own before you can register the vehicle.

Vehicle Identification Number (VIN)

Every vehicle manufactured across the globe comes with a vehicle identification number, or VIN. The reason to include this on the bill of sale is to provide clarification and certainty that the vehicle you're purchasing is the one being sold.

Be sure to compare the VIN on the bill of sale to the owner's permit and the VIN on the vehicle (usually found on the dash or inside the driver's side door) to ensure the numbers match.

Make, Model, Year, Colour, Body Type, Mileage, and Engine

For further clarity, a bill of sale in Ontario should include the vehicle make, model, colour, body type, mileage/odometer reading, and engine (hybrid, electric, gas). This serves as another point of clarity to ensure you're buying and eventually registering the correct vehicle.

Purchase Date

Because Service Ontario requires you to register a used car within six days of purchase, the purchase date is integral. You risk penalties from ServiceOntario or a ticket from the police if you let this period lapse without registration.

Purchase or Sale Price

The purchase price, or sale price, is another important facet of the bill of sale due to tax implications. The Ministry of Transportation requires the buyer to pay 13% in taxes on the purchase of a new vehicle based on either the purchase price or the wholesale value.

Names, Addresses, and Signatures of Buyer and Seller

You can't register the vehicle without the name, address, and signature of the buyer. Sure, you could fill in the information at a later date. But without the seller's information, you won't be able to register the vehicle.

Template or Hand-Written? That Is the Question

Although a bill of sale in Ontario is a crucial document, it doesn't have to be a work of art. In fact, every Canadian province allows you to create your own, whether from a template or written by hand.

If you're in a bind or need to draft a bill of sale quickly to sell a vehicle or get a better deal on an as-is car, just put pen to paper. Just make sure you have everything listed above.

If you want a template to ensure you don't forget any relevant information, consider using one of the free versions from the following websites:

Law Depot bill of sale
True Help bill of sale
Legal Contracts bill of sale

Other Important Documents for Registration

When buying a new vehicle, you'll need several other documents aside from the bill of sale. Some of these are required by law, while others are nice-to-haves from the buyer. Having all of them will make registration easier and provide peace of mind.

Safety Standards Certificate

Known as a warranty of fitness in many other countries, a safety standards certificate, or SSC, is a document that certifies the fitness of a vehicle. While it's legal to purchase or sell a vehicle without an SSC, buyers cannot drive or put license plates on the used car until they can procure an SSC.

Fortunately, getting an SSC is simple. Many garages around Ontario can issue an SSC, provided your vehicle passes the inspection. Just look for a sign that reads Motor Vehicle Inspection Station. Once your vehicle passes the inspection, the SSC is valid for 36 days. In most cases, the seller will provide an SSC, or you can negotiate it as part of the sale.

Drive Clean (Emissions Test)

As of April 1, 2019, passenger vehicles no longer require an emissions test (Drive Clean certification) from the Ministry of Transportation of Ontario. Nevertheless, your vehicle still has to meet emissions certifications to stay road-legal. As a result, this is a nicety you can request from the seller, but it's not a guarantee they'll provide it.

Carfax

A Carfax report includes pertinent information on a vehicle that can help you decide whether the car is worth the purchase price. It includes vehicle history information, such as theft or accidents, as well as the odometer reading. Buying a used vehicle without one of these is a gamble, so make sure you conduct your due diligence or ask the buyer for a Carfax report.

Used Vehicle Information Package (UVIP)

A UVIP is a document required by the Ministry of Transportation of Ontario that's given to a buyer by the seller. The UVIP includes:

Car registration history in Ontario
Year, make, model, and colour
A bill of sale document
Information on liens or outstanding debt
Fair market value
Tax payment information

Because a UVIP is a necessary document for vehicle registration and the sale of a vehicle, make sure to get this from the seller or provide it to the buyer.

Take the Guesswork Out of Buying a Car With Clutch

Drafting a bill of sale isn't a complicated process. But knowing you need one is half the battle. While a UVIP makes this process easier in Ontario compared to other provinces, the bill of sale and other necessary documentation is still your responsibility as a seller.

And that's what makes Clutch a great ally when you're buying a car. With secure financing, a 210-point inspection on every vehicle, a money-back guarantee, and a valid Carfax report, we take the hassle out of buying a used car so you can drive away with peace of mind.