s of September 1, 2022, the Select Luxury Items Tax (luxury tax) on certain imported vehicles, aircraft, and vessels will come into effect, as announced by the Government of Canada. The luxury tax will apply to vehicles and aircraft valued above $100,000 and vessels valued above $250,000. The tax will come as an addition to existing GST and other provincial taxes.
Only new vehicles are subject to this new luxury tax, while used cars and trucks are not – provided they are already registered in Canada.
The amount of the tax is calculated as 20% of the taxable amount above the relevant price threshold of the subject item or 10% of the taxable amount of the subject item – whichever amount is smaller.
For example, if you purchase a vehicle worth $150,000, you will pay a luxury tax of $10,000 (20% of the additional $50,000). And, if you purchase a vehicle worth $500,000, you will pay a luxury tax of $50,000 (10% of the total vehicle cost).
Exceptions to the luxury tax include:
- Ambulance vehicles
- Motor vehicles that are clearly marked and equipped for policing, emergency medical response, or emergency fire response activities
- Recreational vehicles (RVs) that are designed or adapted to provide temporary residential accommodations
- Motor vehicles that are registered before September 2022 with a government
Importers, manufacturers, wholesalers, and retailers of vehicles, aircraft, or vessels within the scope of the luxury tax regime (and that are priced above the thresholds) are required to:
- Register with the Canada Revenue Agency (CRA)
- File a quarterly Luxury Tax and Information Return
Tp register under the Select Luxury Items Tax Act and/or for more information, you can visit www.canada.ca/luxury-tax.
Need More Information?
Do you have further questions and/or need assistance with this import tax change and/or your luxury imports? Contact us, we’re here to help.