When Exit Tax Is Payable
On April 1, 2013 the Mulitijurisdictional Vehicle Tax was re-introduced. ICBC has provided the following summarized information to help clarify when exit tax is payable:
Exit Tax Information
If a prorate vehicle ceases to be prorate licensed, an exit tax of 7% may apply to the depreciated purchase price of the vehicle. When exit tax is payable, it is charged and collected by ICBC.
When a Vehicle Ceases to be Prorate Licensed
A vehicle ceases to be prorate licensed if a full calendar day passes without that vehicle having a valid prorate licence. If this is the case, exit tax may apply.
Some situations when exit tax applies:
• A prorate licence expires at the end of the month and it is not renewed on or before the first day of the following month.
• A vehicle leaves one prorate fleet to join another prorate fleet (a fleet-to-fleet transfer). The prorate licence for the vehicle under the first fleet is cancelled, and the prorate licence for the vehicle under the second fleet is not issued on the day of or day following the cancellation of the first licence.
• A seasonally-operated prorate licensed vehicle is taken off the road, and its licence is cancelled.
• A prorate licence for a vehicle is cancelled while an operator goes on vacation (even if a new prorate licence is obtained after the vacation).
• A prorate licensed vehicle is sold or traded in and the prorate licence is cancelled in conjunction with the sale or trade-in, and the new owner of the vehicle does not obtain a prorate licence for the vehicle on the day of or day following the cancellation of the prior licence.
• When a prorate vehicle is involved in a total loss.
No exit tax is payable in the following circumstances:
• The vehicle is leased, or
• The vehicle was previously licensed, by its owner, for use solely within BC, or
• The vehicle is licensed for use in a jurisdiction outside BC and is not licensed for use in BC, or
• No break in the prorate licence (not a day passes without having a valid prorate licence), or
• The vehicle paid 100% PST, TDP or HST and had a BC only licence prior to prorating, or
• If the vehicle was added or renewed prior to April 1 2013, MJV was not collected therefore exit tax is not imposed.
It is important to note that if an owner operator ceases to be prorate licensed but will continue to work for the same company who owned the prorate account but under commercial plates, the company owner (not the owner operator) will owe the exit tax.
For more detailed information regarding the Multijuristictional Vehicle Tax (MJV Tax), please see the Multijuristictional Vehicles Provincial Sales Tax Act by The Ministry of Finance, Bulletin PST 135 (August 2013).
Tia Chisholm, HUB International TRANSPORTATION
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