Automotive Luxury TaxAutomotive Luxury Tax

Automotive Luxury Tax. This is to provide information about the application for the luxury tax on specific vehicles. Over $100,000 hatchbacks, convertibles, sport utility vehicles, sedans, coupes, and light-duty pickup trucks may be subject to the luxury tax. Canada’s new luxury goods tax, which notably targets luxury cars, private planes, and yachts, took effect on September 1, 2022.

The new policy was initially proposed in August 2021, when the Department of Finance Canada submitted The Select Luxury Items Tax Act for public comment. The Select Luxury Items Tax Act levies a tax on the sale and import of particular automobiles and airplanes valued at more than $100,000. And vessels valued at more than $250,000. The proposed tax was later incorporated into the 2022 Budget Implementation Act (Bill C-19), signed into law on June 23, 2022.

According to Canada Revenue Agency (CRA), the luxury tax will be computed at the lower of 20% of the value over the predetermined limit ($100,000 for vehicles, personal aircraft, and $250,000 for vessels) and 10% of the item’s entire worth subject to tax.

Vehicles Covered by the Select Luxury Items Tax Act

The luxury tax will be levied on automobiles that match the Act’s classification of a subject vehicle and are priced beyond $100,000.

The term “subject vehicle” refers to a passenger vehicle that fits all of the following criteria:

>It was manufactured after the year 2018.

>It’s primarily intended to transport people on streets and highways.

>It has a maximum seating capacity of ten people.

>It has a gross vehicle weight of no more than 3,856 kilograms.

>and is built to navigate on four or more wheels in contact with the ground.

Sedans, hatchbacks, coupes, sport utility vehicles, convertibles, and light-duty pickup trucks are all examples of subject vehicles. The Luxury Tax is imposed on all provinces and territories in Canada.

Motorcycles and some vehicles for off-road use, like all-terrain automobiles and snowmobiles, racing cars (i.e., vehicles that aren’t legal for street use and are utilized only for on-track or off-road racing), and some motor homes are exempt from the Luxury Tax. Additionally, ambulances, hearses, and vehicles certified for policing or labeled and equipped for medical emergencies and fire assistance will be exempt from the levy.

Who is obligated to pay the Automotive Luxury Tax?

The Luxury Tax will be levied on registered vendors who sell subject products delivered in Canada for more than $100,000 for vehicles and aircraft and $250,000 for vessels. Sales of relevant items to makers, distributors, and retailers registered for the Luxury Tax will be excluded. Non-registered importers will also be liable to the Luxury Tax on the importation of subject commodities.

Under the Act, manufacturers, distributors, retailers, and importers must register as a vendor with the Canada Revenue Agency (CRA). Registration must be completed no later than the day the sale is finished. Importation must be completed by the earlier of the day the relevant item is accounted for under Customs Act, Section 32.

If a person obligated to register does not apply for registration, they may be fined $2,000. Furthermore, an importer obliged to be registered but does not apply for registration is subject to a fine under s. 114, on top of any other penalties imposed. The fine will be $1,000 or 50% of the amount owed in luxury tax, whichever is larger.

Are you looking to get a vehicle? Get a genuine offer today!

The luxury tax applies exclusively to automobiles manufactured in 2018 or after and sold for $100,000 or more. The new luxury tax does not apply to vehicles manufactured in 2018 or after and sold for less than $100,000. We can help you find a car in and around Edmonton, Canada. We’re Edmonton Auto Loans; we provide a large selection of vehicles manufactured in 2018 or earlier. These vehicles are exempt from the luxury tax. We also have automobiles from 2018 or later.

Browse used vehicles here and shop with confidence. Allow us to assist you with your vehicle needs, and we guarantee you will be satisfied. It’s free, and there’s no obligation to learn about your best financing alternatives. So apply whenever you like. Call us at 1-855-227-1669 or click here to get pre-approved today!

Visit the Government of Canada for more information on the Automotive Luxury Tax.

Apply now Call Now
AI Chatbot Avatar