There was a time when owning a private jet, luxury car, and yachts was a fun play for billionaires. People with high net worth would buy luxury items like lavish cars and yachts. While some would go to the degree to buy a private jet, other millionaires assert that a private jet is a necessity for them. In any case, these vehicles are considered luxury items – at least in the United States.
However, buying these luxury vehicles has become more complex north of the border. Recently, the Canadian government announced that it would make the purchase of luxury items taxable. In June 2022, the Canadian government approved the Select Luxury Items Tax Act. According to this latest act, all vehicles that exceed the retail price of $100k will be eligible for the new tax that will be implemented by September 2022. Likewise, it will be implied on boats and yachts with a retail price of more than $250k.
Furthermore, the Canadian government released more details about the new taxation act. According to the official statement, the new taxation rule will be calculated based on 10% of the total cost of the vehicle. In other words, buyers of these luxury vehicles – that have a retail price of more than $10k will pay 10% in taxes.
The New Tax Initiative Will Be Implemented By the Canadian Revenue Agency (CRA)
From September 1, 2022, all Canadian importers, wholesalers, and retailers will have to register themselves with the relevant agency. Canada Revenue Agency (CRA) will deal with the registration and other implementation procedures of the new act. According to the Canadian government’s official statement, all importers, manufacturers, retailers, and dealers will have to register their businesses with the CRA.
Ultimately, this agency will monitor the tax process of these dealers. Likewise, the agency will also make calculations of the new eligible taxes and look over the entire process.
The New Tax Act of the Canadian Government Raises Eyebrows
It is apparent that buying and selling luxury vehicles, boats, and yachts is a massive business. There are thousands of retail stores and wholesalers across Canada who deal with the selling and buying of luxury cars, jets, and yachts.
Thus, if this bill is implemented, it will be pretty hard for these businesses to sustain, given the fact that they will be obliged to pay heavy taxes. Consequently, they will be compelled to shut their businesses down. If that happens, thousands of employees will lose their jobs.
While the Canadian government is set to implement the new act, business owners are taking it with a pinch of salt. There is also a massive backlash that this bill is unfair. Until September, Canadian dealers will have the opportunity to make any amendments to the bill for good.