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  • “They feel like they’ve paid more than their fair share in payroll taxes and everything else they do in their businesses every day,” Delaney said. “And so to be hit … with this tax is certainly not putting us in a very good light with the customer.” - Source: Internet
  • “Whatever you define as the threshold for a boat or whatever luxury good it is, somebody will do something to get around it,” Drummond said. “That’s a waste of the consumers’ time. And it’s a waste of the tax officials’ time.” - Source: Internet
  • The price is calculated in reference to any excise taxes and customs duties included in the price (e.g., the $100 federal excise tax on vehicle air conditioners and any federal excise tax imposed on a fuel-inefficient vehicles). The price is calculated without reference to any provincial retail sales tax (“PST“), the Quebec sales tax (“QST“) and the federal goods and services or harmonized sales tax (“GST” or “HST“), which are imposed on the LT. The price also includes delivery or freight charges. - Source: Internet
  • Mark Delaney is director of sales and marketing at a Vernon, B.C., company that manufactures boats worth up to $500,000. He said the tax will undermine a boom in boat sales that began when people were stuck at home during the COVID-19 lockdowns. - Source: Internet
  • If you sell a luxury car that is less than 2 years old and that has already been subject to LCT, you’ll only have to pay the LCT when selling the car if it has increased in value. When the vehicle is modified for disability access. Although the base price of a vehicle bought by or for a disabled person is subject to LCT, any modifications to help them drive it, or be transported in it, are not included in its taxable value. - Source: Internet
  • The purchaser cannot be a registered vendor of the subject vehicles. The registered dealer has reported and accounted for the tax as part of its net tax for the reporting period in which the LT became payable. The subject vehicle is not used in Canada between the time of its sale and exportation, except to the extent reasonably necessary or incidental to its manufacture, offering for sale, transportation or exportation. The subject vehicle is not registered with the Government of Canada or any province between the time of its sale and exportation, except if the registration is done solely for a purpose incidental to its manufacture, offering for sale, transportation or exportation. The purchaser exports the subject vehicle as soon after the sale is completed as is reasonable having regard to the circumstances surrounding the exportation and, if applicable, the normal business practice of the purchaser and vendor, and The purchaser provides to the dealer, and the vendor retains, evidence satisfactory to the Minister of National Revenue ( the “Minister“) of the export of the subject vehicle from Canada by the purchaser, or Prescribed conditions are met. - Source: Internet
  • Only vehicles typically used as personal vehicles, such as sedans, sports cars, minivans and SUVs, will be taxed under the Select Luxury Items Tax Act. The vehicle must have a weight of 3,856 kilograms or less and have seating for 10 or fewer passengers. Motorcycles, ATVs, snowmobiles, motor homes, ambulances, police cars, firetrucks and military vehicles are exempt from the tax. - Source: Internet
  • The luxury car tax threshold will rise by 6.6% for fuel-efficient vehicles and 3.9% for other vehicles that are imported, acquired, or sold in the 2022-23 financial year (FY), as compared to the previous financial year’s threshold. - Source: Internet
  • “I think it is great for Canadians to be successful. It is great for Canadians to be prosperous. I also think that people who are doing really, really well should feel comfortable supporting everybody else,” she said. “And, I bet if you ask the truckers and mechanics who are here, do they think it’s fair for someone who is spending $250,000 on a boat to pay a 10 per cent luxury tax so that we can afford the things we need as a country? I bet they’d say ‘Yeah, that makes a lot of sense.’” - Source: Internet
  • Although the base price of a vehicle bought by or for a disabled person is subject to LCT, any modifications to help them drive it, or be transported in it, are not included in its taxable value. When an endorsed public institution imports a vehicle for display only. If the vehicle being imported is a collector’s piece or a work of art that is intended for public display only, these institutions can reclaim any LCT paid. - Source: Internet
  • There is the issue of how effective this rebate mechanism would be to level the competitive landscape with foreign competitors of dealers. Certain of these conditions overlap with the point-of-sale GST/HST relief for zero-rated exported supplies of goods made by vendors (i.e. taxed at a 0% rate for GST/HST purposes). Whereas GST/HST relief is allowed at point-of-sale, the LT rebate mechanism means that the LT is still imposed by the dealer on the completion of the sale, subject to recovery by rebate at a later time, if all the conditions for the export rebate are met. - Source: Internet
  • A report from Ottawa’s Parliamentary Budget Officer suggests that the tax could raise CA$572 million ($451 million) for the government through the 2026-27 budget year. However, the PBO report suggests the tax will also reduce sales of new luxury vehicles by up to CA$566 million ($446 million), or approximately CA$125 million ($98 million) annually over the 4.5-year period analyzed. - Source: Internet
  • Another concern is the $100,000 price threshold. There is no indexing for inflation. With annual inflation currently running at over 7% in Canada and supply chain issues worldwide, including chip shortages, how long until the $100,000 price threshold is no longer considered an adequate threshold for determining whether a vehicle is a “luxury”, as opposed to a barrier inhibiting middle class vehicle purchases and leases? - Source: Internet
  • Due to the unique nature of the LT, there are consequential challenges, concerns and risks that dealers and their financing entities need to address. In addition to what we have discussed above, non-compliance can give rise to offences and significant penalties. Dealers and their financing entities have to be pro-active in exercising appropriate due diligence, and in designing contractual terms to alleviate concerns and risks, while passing-on any potential tax savings, such as on export sales, to customers to facilitate sales. - Source: Internet
  • A lease of a subject item is not considered to be a sale under the Luxury Tax regime. Lessors that carry on a business of leasing, but not selling, are not required to register and the Luxury Tax would, instead, apply when the lessor purchases a subject item. The cash flow effect of this tax should be considered when determining upfront charges and periodic lease payments charged by the lessor to the lessee. Registered vendors that lease subject items would be required to self-assess the tax when moving the subject item from inventory to lease. This reporting requirement will need to be closely tracked by registered dealerships that also lease subject items. - Source: Internet
  • The Luxury Tax, originally proposed in the 2021 budget, received Royal Assent on June 23, 2022. The tax will apply to new cars and aircraft with a retail sales price over $100,000 and to vessels over $250,000. It will be calculated at the lesser of 20% of the value above a set threshold ($100,000 for cars and personal aircraft, and $250,000 for vessels) and 10% of the full value of the item subjected to tax. - Source: Internet
  • “But [the luxury tax] is a loaded approach. It’s not just saying, ‘We want to have the better-off paying more tax.’ We’re saying we want them to pay more tax on very specific things, not even close to being all luxury goods.” - Source: Internet
  • “Historically, these taxes have never achieved their main goal, which is to raise revenue, and are considered to be ineffective,” he said. “It will be detrimental to the industry, and particularly now amid the pandemic with the sector hard hit and down 20 per cent in 2020. Now is not the time to introduce a new tax, when the auto sector is trying to recover from the crisis.” - Source: Internet
  • If the vehicle being imported is a collector’s piece or a work of art that is intended for public display only, these institutions can reclaim any LCT paid. Re-imported vehicles. If a model is bought locally and LCT is paid but then the vehicle is shipped out of the country for modification, repair, upgrades or restoration, it can be brought back in as a non-taxable importation. This might happen when purchasing a car that requires a modification that can only be carried out elsewhere. - Source: Internet
  • Unlike GST/HST, the LT is generally imposed directly on the registered dealer. It is not intended to be a direct tax on the consumer or end-user. The LT is imposed on the dealer at the time of the retail transaction (when the sale is completed or lease is commenced). The dealer is the “taxpayer”, unlike GST/HST where the registered dealer is a tax collection “agent” on behalf of the Federal Government for taxes payable by the dealer’s customers. - Source: Internet
  • A report from Scotiabank suggests the luxury tax may not meet the government’s expectations. The report analyzed British Columbia’s implementation of a provincial sales tax on vehicles costing more than CA$125,000 ($98,700), adding up to 20 per cent to the sales price. Luxury car sales quickly fell after the tax’s implementation, experiencing a five per cent year-over-year contraction despite reporting growth of above 10 per cent year-over-year before the tax was implemented. - Source: Internet
  • How does the luxury car tax apply to electric vehicles? When it comes to electric vehicles, such as Tesla models, the luxury car tax bracket is the same as for fuel-efficient cars. Currently, many people deem this unfair as it disincentivises people from purchasing zero-emission vehicles. The electric vehicle industry has been calling for an abolition of the LCT for electric cars for some time. For those currently in the market for an EV, it’s worth noting the following vehicles fall under the current $79,659 threshold, meaning they are exempt from LCT and it does not apply: - Source: Internet
  • Vehicles - Passenger vehicles, with a date of manufacture after 2018, typically suitable for personal use including coupes, sedans, station wagons, sports cars, passenger vans, and minivans with seating capacity of not more than 10 passengers, SUVs, and passenger pick-up trucks will be subject vehicles for purposes of the new tax. Motorcycles and certain off-road vehicles, such as all-terrain vehicles and snowmobiles, racing cars (i.e., vehicles that are not street legal and are owned solely for on-track or off-road racing), and certain motor homes are not subject vehicles and are not in the scope of Luxury Tax. Similarly, ambulances, hearses, vehicles clearly marked for policing activities or marked and equipped for emergency medical, and fire response will also fall outside the scope of the tax. - Source: Internet
  • The LT is intended to be a one-time tax imposed on a “subject vehicle” above the $100,000 price threshold with a date of manufacture after 2018. A “subject vehicle” is a motor vehicle with four or more wheels designed or adapted primarily to carry individuals on highways and streets, has a seating capacity of not more than 10 individuals, and a weight not exceeding 3,856 kg. Therefore, motorcycles and commercial trucks and buses would generally be excluded, as would recreational and commercial vehicles designed for off-road use. - Source: Internet
  • Calculate the value of the car’s government charges exclusive price that exceeds the LCT threshold, by subtracting the LCT threshold from the car’s price (calculated in step 1). Exclude the GST and LCT from the value of the car’s government charges exclusive price that exceeds the LCT threshold (calculated in step 2), by dividing this amount by 1.43 (10% GST + 33% LCT). Calculate the LCT included in the car’s sale price, by multiplying tax and government charges exclusive portion of the car’s price that exceeds the LCT threshold (calculated in step 3) by the LCT rate (0.33 - 33%). - Source: Internet
  • The luxury car tax is a tax collected by the Australian Taxation Office on imported vehicles valued above a set price threshold. The tax is typically payable by businesses that purchase or import luxury cars as well as on non-business entities that import luxury cars. That outlay is then included in the price of the vehicle and passed on to a buyer. - Source: Internet
  • I, like many other people, am on the lookout for a good used car, but so many of them I see online may possibly incur the luxury tax as they may have cost £40,000.01p when new. Contacting every dealer and asking them to look up the original MRRP is not really an option, so I thought there may be another way? - Source: Internet
  • Important - Each LCT exemption is based on legislation that provides the basis for the exemption. The description of exemptions listed below is only a summary. Refer to the legislation to determine whether a specific commodity is taxable or exempt. Goods that do not fit the specific terms of the relevant legislation are not exempt. - Source: Internet
  • Endorsed public institutions, such as museums, galleries or libraries, purchasing a car locally will have to pay LCT if applicable. When you defer your LCT payment. There are certain circumstances under which you can quote your ABN at the time of purchasing or importing a luxury car to defer paying LCT until you have sold or imported the car at the retail level. You’ll need to be registered for GST and have an ABN, plus you will need to either plan to hold the car for trading stock, to carry out research and development work for the car manufacturer or to export the car where it is GST-free. - Source: Internet
  • If you need to work out the amount of LCT payable on the sale of a luxury car, start by subtracting the current LCT threshold ($69,152 for ordinary vehicles; $79,659 for environmentally-friendly variants) from the price of the car (including GST). Next, divide this amount by 1.1 (the 10% GST rate). Finally, multiply the number you now have by 33%, remembering that the LCT rate is 33%. This will give you the amount of LCT payable on your car. - Source: Internet
  • On March 11, 2022, the federal Department of Finance released draft legislative proposals known as the Draft Select Luxury Items Act (the “Proposed Act”) to implement the Luxury Tax (the “LT”) on vehicles, aircraft and vessels as announced in the April 2021 federal Budget. The LT would apply on certain transactions involving cars and aircraft priced or valued at $100,000 or more, and boats priced at $250,000 or more. The tax would be calculated as the lesser of (1) 20 percent of the value above the applicable price or value threshold, or (2) 10 percent of the full price or value of the vehicle, aircraft or vessel. - Source: Internet
  • Luxury Car Tax (LCT) is a tax charged when you buy a vehicle that meets a set of “luxury car” criteria. LCT can add a significant amout to the price you pay for your car. Read on to find out what Luxury Car Tax is, which vehicles it applies to, how it is calculated and what it means for you. You may like to try our Luxury Car Tax (LCT) Calculator. - Source: Internet
  • That distinction could impose greater risks on dealers, and could warrant the dealers addressing them in their commercial terms in their sale and lease agreements with customers. For example, under the GST/HST legislation, vendors/lessors, as the GST/HST collection agents on the Government’s behalf, have direct recourse against their customers, the “taxpayers”, to pursue payment of GST/HST. Under the Proposed Act, the LT would be imposed on the registered dealers, and absent specific terms in their agreements with customers, they could have no recourse against customers for any shortfall in recovery of the LT. If, for example, the LT was miscalculated and not fully embedded in the price, then the dealer would bear the cost of that shortfall, absent a specific indemnification or other contractual recourse mechanism against the customer. - Source: Internet
  • Luxury car tax is payable on imported luxury cars unless the car is covered by a specified Customs duty concession Item or LCT exemption. Where imported luxury cars are covered by an exemption, an exemption code can be used in our systems to indicate which LCT exemption is being claimed. A list of available exemptions (and associated codes) is provided below. - Source: Internet
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