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First announced in the 2021 Federal Budget, the new luxury tax will apply to sales, leases, and imports in Canada of certain luxury recreational aircraft, vessels, and vehicles delivered on or after September 1, 2022.
What is subject to the tax?
The sale, lease or import of new vehicles, private aircraft, and leisure vessels with a sale price* or value exceeding the price threshold of:
$100,000
for vehicles and aircrafts
$250,000
for boats and yachts
*The price includes taxes, duties, levies and fees, except GST/HST.
Modifications of ≥$5,000 within 1 year of sale can also attract the tax.
Who pays the tax?
The Vendor. Where the vendor is a federal, provincial, or Indigenous government, the purchaser pays.
Vendors making qualifying sales, leases and imports must register, file quarterly returns, and remit the tax.
Sales between registered vendors are generally exempt.
The luxury tax cost will be passed on to consumers – expect to pay GST/HST on that cost.
How much is the tax?
The lesser of:
10%
of sale price or value; and
20%
of the excess over the price threshold
When is the tax paid?
Upon Delivery. The tax becomes payable at the earlier of:
• The time of possession or right to use
• The transfer of ownership
Additional tax may be payable on completion of modifications to the luxury item within 1 year of sale.
Exemptions to the tax
• Written agreements entered into before 2022
• Vehicles, aircraft, boats manufactured before 2019
• Vehicles with seating capacity of >10 individuals
• RVs that provide temporary accommodation
• Emergency vehicles
• Vehicles with <4 wheels
• Cargo and military aircraft
• Floating homes
• Commercial fishing boats
• Luxury items previously registered with a province or the Government of Canada
