Canada introduces Select Luxury Items Tax on Importation
Memorandum D18-4-1 covers i. vehicles, ii. aircraft and iii. vessels and came into effect on September 1st
In brief, the Government of Canada has introduced a Select Luxury Items Tax on the importation of certain vehicles and aircraft valued above $100,000 and certain vessels valued above $250,000. The luxury tax came into effect on September 1.
Date of effect
1. The luxury tax will come into effect on September 1, 2022.
2. For a list of definitions of the words found in this memorandum, refer to subsection 2(1) of the Select Luxury Items Tax Act at the link found in the References section of this memorandum.
3. All amounts expressed in this memorandum are in Canadian dollars (CAD).
Scope of the luxury tax
4. The luxury tax applies to importations into Canada of subject vehicles and subject aircraft that have a taxable amount above $100,000, and subject vessels that have a taxable amount above $250,000 (the price thresholds, respectively). For more information, refer to the Price thresholds, Taxable amount and Amount of luxury tax section of this memorandum.
5. A vehicle, aircraft or vessel falls within the scope of the luxury tax regime if it meets the definition of a subject vehicle, subject aircraft or a subject vessel, as set out in subsection 2(1) of the Select Luxury Items Tax Act. Such vehicles, aircraft and vessels are broadly referred to as subject items. Vehicles, aircraft or vessels that do not meet these definitions are not subject to the luxury tax. For more information, refer to the Subject items section of this memorandum.
6. Certain persons are required to register with the Canada Revenue Agency (CRA) as registered vendors under the Select Luxury Items Tax Act. Such persons include manufacturers, wholesalers, retailers and importers of subject vehicles, subject aircraft or subject vessels that are within the scope of the luxury tax regime and that are priced above the relevant price thresholds. For more information, refer to the Registration framework section of this memorandum.
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