Fiscal and Financial Planning Guide 2024-2025
General > Luxury Goods Tax
The federal government is eliminating the luxury tax on aircraft and boats acquired after the budget date of November 4, 2025. However, it remains in effect for automobiles.
The tax will be the least of :
- 20% of the excess of the previous thresholds
- 10% of the value of the asset
It can be noted that the luxury tax will reach the maximum of 10% of the value of the property for automobiles costing $250,000.
Vehicle Trade-In
The value of a vehicle given in trade-in is not taken into consideration in the calculation of the luxury tax. The luxury tax is calculated on the gross purchase price of the new vehicle.
The value of the traded-in vehicle may, however, be applied as a reduction to the selling price for the purposes of calculating GST-QST as before.
Used Vehicles
The luxury tax does not apply to used vehicles.
Vehicle Leasing
The luxury tax will be payable by the dealer or the leasing company upon purchase of the vehicle for subsequent leasing. They will therefore take it into account in the calculation of monthly lease payments, upfront fees, and residual value.