Owing jets, yachts, or luxury cars was never a cheap affair. However, it is set to get all the more expensive for Canadians as the country’s government has announced the levy of a high-end tax on such purchases. Yes, that’s right! The decision was made as part of the 2022 tax budget and will be applicable to any organization buying luxury vehicles. The legislature which underlines it is called The Select Luxury Items Tax Act and will apply to all new cars and aircraft with retail prices exceeding $100,000 and boats that cost more than $250,000.
The tax will also apply retroactively to any “written sales agreements” made after January 1, 2022. Further, retailers, importers, wholesalers, and manufacturers will be required to register with the Canada Revenue Agency (CRA) on the first day of sale or importation of all orders under the new rules. However, not many are pleased with the novel guidelines.
Commenting on it, Anthony Norejko, president and CEO of the Canadian Business Aviation Association, in a statement warned the government that “the economic impact of the luxury tax will be significant and has not been studied with a comprehensive understanding of our industry.”
“We urge this government to return to the table and, at the very least, consult with our sector on reasonable timelines for tax policy changes that should not be punitive but indeed supportive for all Canadians,” he further added.
According to the Parliamentary Budget Office, the new luxury tax is expected to generate $600 million in revenue over five years. Your thoughts on it?