Recent News

 

 

 

An update on the Federal Luxury Tax


Scott Long - August 5, 2022 - Featured Content Area


What is the Luxury Tax? 

Initially proposed in the 2021 Budget, the new measure levies a tax on the sale of new luxury cars and aircraft with a retail sale price over $100,000 and new boats over $250,000. Retailers must apply the tax at the point of sale.

See how it's calculated


The government will implement the Luxury Tax on September 1, 2022. 


Latest updates


The Canada Revenue Agency (CRA) published the Luxury Tax Notice LTN2, subject vehicles under the Select Luxury Items Tax Act on Canada.ca:


English:

Luxury Tax Notice LTN2


Français:

Avis sur la taxe de luxe LTN2

 

The CRA also published these tax forms associated with LTN2:


B500 (English & Français):

B500 Luxury Tax and Information Return for Registrants
 

B500 Déclaration de la taxe de luxe et de renseignements pour les inscrits
 

L100-1 (English & Français):

L100-1 Luxury Tax Exemption Certificate for Subject Vehicles
 

L100-1 Certificat d'exemption de la taxe de luxe sur les véhicules assujettis

 


More information

We compiled these resources from Canada.ca ⇒ to help you understand the tax and its implementation better:


Details about the implementation


How to register under the CRA


Exclusions
 


Calculating the Luxury Tax

Generally, you can calculate the tax by taking the lesser of:
• 10% of the taxable amount or 
• 20% of the amount above the $100,000 price threshold ($250,000 for boats).


For example:

A customer purchases a new car with a retail price of $116,500.
How much will the Luxury Tax be?

 

Step one
Calculate 10% of the retail price:

10% X $116,500 = $11,650

 

Step two
Calculate the 20% above the $100,000 vehicle price threshold:

20% X $16,500 = $3,300
[$116,500 - $100,000 = $16,500]

 

Step three
Determine which amount is lower:

In this case, the 20% calculation above the threshold is less than the 10% calculation.


The Luxury Tax payable is $3,300.


Learn more about calculating the Luxury Tax


Back to top


  • Categories:
  • Industry Advocacy