Canada: Luxury car tax

The Canadian government is considering introducing a luxury tax on cars, boats and planes. For cars, it would apply from a price of 71,000 euros.

In order to improve its state budget by around 110 million euros annually, Canada is planning to introduce a luxury tax on cars, boats and private aircraft (up to 40 seats including helicopters and gliders). The law defines a threshold of 100,000 Canadian dollars for cars and airplanes – the equivalent of around 71,000 euros. For boats, the value is 250,000 Canadian dollars (equivalent to around 178,000 euros).

Applies to models from 2018

As a luxury surcharge, either ten percent of the total purchase price or 20 percent of the amount that exceeds the threshold must be paid - buyers decide in favor of the cheaper model. The luxury tax is added to the purchase price and then the sales tax is charged. Motorcycles, snowmobiles, ATVs, and race cars are not covered by the new rule. For cars, planes and boats, the luxury tax applies to all models built after 2018 – including used vehicles.

Of course, criticism of the new luxury tax comes from the car manufacturers. With the luxury surcharge, Canada will not be able to achieve its self-imposed climate goals, especially in the area of ​​​​mobility, since the luxury tax naturally also affects electric cars. They are primarily still in the high-price segment and are therefore often subject to the penalty tax. Canada also offers purchase incentives for electric cars of up to around 3,600 euros, but these only apply to cars that can cost a maximum of around 40,000 euros, depending on the model.

The final draft law has now been presented to the public for inspection and can be commented on until April 11, 2022. The law will then be voted on in Parliament. It should then come into force on September 1, 2022.

Conclusion

Canada wants to levy a luxury tax on luxury goods such as cars, boats and private planes in the future. This should flush around 110 million euros a year into the state coffers. It is scheduled to come into force on September 1, 2022. Until then, the car lobby wants to create a strong atmosphere against the law.

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