The Canadian federal government has released draft legislation for a new tax on the sale of new luxury cars and aircraft with a retail sale price over CAD$100,000, and new boats over CAD$250,000. The tax will be the lesser of 20 per cent of the value above these price thresholds, or 10 per cent of the full purchase value.
To implement this commitment, the government released for public comment draft legislative proposals. The draft legislative proposals reflect, and respond to, input received during consultations with stakeholders.
The new draft legislative proposals build on, and replace, the backgrounder that was released on August 10, 2021, as part of the consultation on the proposed Luxury Tax. Two notable new provisions contained in these draft legislative proposals are as follows:
- relief is proposed to be provided to after-sale improvements that are made to vehicles, aircraft or vessels purchased below the relevant price threshold; and
- relief for aircraft is proposed to be expanded to take into account qualifying flights that are conducted in the course of a business with a reasonable expectation of profit.
Subject to Parliamentary approval, this tax would come into effect on September 1, 2022.
If you have any questions or would like advice related to the matters set out in this post, or if you have questions in relation to matters of real estate, corporate law, intellectual property and trust matters, please contact us at 604-688-4900 or by email to Paul Barbeau at paul@barbeau.co or to Morgan Best at morgan@barbeau.co