As announced in the Federal 2022 Budget, the Government of Canada has introduced a luxury tax on the sale or importation of certain vehicles and aircraft priced above $100,000 and certain vessels priced above $250,000. The new Select Luxury Tax came into force on September 1, 2022.
The luxury tax does not apply to companies who are required to register with the Canada Revenue Agency (CRA) under the Luxury Tax regime. Registered companies are typically, companies that in the course of their business activities manufacture, wholesale, retail or import the subject goods above the relevant price threshold.
In general, the luxury tax applies only to persons that are not registered under the luxury tax regime such as consumers who purchase or import the select good for their personal use and enjoyment.
Registration details are provided at: Registration Under the Select Luxury Items Tax Act – Canada.ca, published by the CRA.
The tax is to be calculated as the lesser of:
- the taxable amount multiplied by 10%
- the amount that results from subtracting $100,000 from the taxable amount and multiplying the difference by 20%
Complete details, including the subjectivity, exclusions and calculation of the tax have been provided by CRA in Subject Vehicles Under the Select Luxury Items Tax Act – Canada.ca and in CBSA’s D Memorandum D18-4-1, Select luxury items tax on importation.