Fiscal and Financial Planning Guide 2024-2025
General > Luxury Goods Tax
The federal government has put in force a tax on luxury goods acquired for personal use such as cars, boats and even aircrafts (planes, helicopters, planners) on sales or rentals made after September 1st, 2022.
The following table shows the amounts above which the tax applies.
The tax will be the least of :
- 20% of the excess of the previous thresholds
- 10% of the value of the asset
We can notice that the luxury tax will reach its maximum of 10% for cars and aircraft costing $250,000 or more and for boats costing $500,000 or more.
Exchange of vehicles
The value of a vehicle that is given in exchange is not taken into consideration when calculating the luxury tax. The luxury tax is calculated on the gross price of the new vehicle.
The value of the exchanged vehicle can however be applied in reduction of the final selling price for GST/QST calculating purposes, as before.
Used Vehicles
The luxury tax does not apply on used vehicles,
Vehicle renting
The luxury tax will be payable by the dealer or the rental company when the vehicle is bought to rent it afterward. These will therefore be considered the initial cost and residual value when calculating the monthly rental payments.