In Ontario, Canada, you can transfer ownership of your car tax-free to an eligible family member by submitting a sworn statement along with the relevant documents to Service Ontario.
But who are the family members ‘eligible’ for the gift of the used motor vehicle? What is a sworn statement, and does it need to be notarized? What documents will you need if you want to give your used car to a family member? Read on to find out.
Who Are the Family Members ‘Eligible’ for Gift of the Motor Vehicle?
Family members eligible to be gifted your motor vehicle are the following:
- Your spouse
- Your siblings
- Half siblings (siblings with a common parent)
- Adopted siblings (siblings with a common parent through adoption)
- Your parents-in-law
- Your parents, step-parents, grandparents, and step-grandparents
- Your children, step-children, grandchildren, step-grandchildren, and children-in-law
A List of Documents Needed for Family Gift of Used Motor Vehicle
If you’re transferring the ownership of your car to a family member, make sure you have all the documents you’ll need for the process. Here’s a list:
- A filled out Sworn Statement Form 1157E for Family Gift of Used Motor Vehicle
- Motor vehicle insurance
- Your driver’s licence
- Vehicle Ownership Permit
- Safety Standards Certificate or Spousal Declaration
- A completed Plate Transfer Declaration
Note that a Safety Standards Certificate is not required when the transfer is between spouses; in that event, you’d want to opt for another document called the Spousal Declaration.
Additionally, the Plate Transfer Declaration is only permitted between spouses, parents, and children.
Once the Sworn Statement for a Family Gift of a Used Motor Vehicle in the Province of Ontario form is filled out, please don’t sign your document until Notary public asks you to sign before them either physically or remotely.
What is the Financial Benefit of Gifting a Car in Ontario
If you’re gifting your used motor vehicle to any of the aforementioned family members, the Retail Sales Tax will be waived. RST is based on the Canadian Red Book value of the vehicle and it’s typically required when a vehicle’s ownership is transferred from one individual to another.
Additionally, in Ontario, gifting a car to a family member comes with no gift tax.
What are the Restrictions to Consider?
- Only one exempt transfer of the same vehicle, between family members, is allowed within a 12-month period.
- The car loan balance must be paid off: If there is still an outstanding balance on the car loan, it must be paid off before you can transfer the ownership of the vehicle to the new owner. You cannot transfer ownership of a vehicle with an outstanding lien.
What is a Sworn Statement (Form 1157E) for a Family Gift of a Used Motor Vehicle in the Province of Ontario?
The ‘sworn statement’ for a family gift of a used motor vehicle is found in the form of a document called Form 1157E. The form number simply refers to a form that sets out the circumstances of the ownership and transfer of the car that’s being gifted.
It is important that the sworn statement or the Form 1157E be:
- Signed by the donor and the recipient of the motor vehicle
- Notarized by the notary public or commissioner for taking affidavits Ontario
The sworn statement Form 1157E can be downloaded from the Government of Ontario’s Form Repository.
Another important thing about the sworn statement is that everything that you’re writing on the form has to be true – it is a criminal offence to lie or mislead on a sworn statement.
What if a Vehicle is Registered Under Joint Ownership?
In such a scenario, the recipient of the vehicle must qualify as a family member for both owners to be eligible for the exemption.
Moreover, If the vehicle will be jointly registered, both recipients of the vehicle must qualify as a family member to the donor to be eligible for the exemption.
Can the Sworn Statement Form 1157 be Notarized Online?
Yes, the sworn statement for Family Gift of Used Vehicle or Form 1157 can be notarized online – just book an online appointment with us at your earliest convenience!
With our online notary system, even if the family member receiving the car is on the other side of the province, we can get the sworn statement e-signed by them and have it comissioned in no time.