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.
The Canada Revenue Agency (CRA) published the Luxury Tax Notice LTN2, subject vehicles under the Select Luxury Items Tax Act on Canada.ca:
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
We compiled these resources from Canada.ca ⇒ to help you understand the tax and its implementation better:
Details about the implementation
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).
A customer purchases a new car with a retail price of $116,500.
How much will the Luxury Tax be?
Calculate 10% of the retail price:
10% X $116,500 = $11,650
Calculate the 20% above the $100,000 vehicle price threshold:
20% X $16,500 = $3,300
[$116,500 - $100,000 = $16,500]
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