Canada’s Luxury Tax on High-End Vehicles

Canada’s Luxury Tax on High-End Vehicles

What You Need to Know About Canada’s New Luxury Sales Tax

Those looking to purchase a luxury vehicle are about to become subject to a brand new luxury tax implemented from the Canadian Government. This law comes into effect on September 1st, 2022, and the vehicles in question affected by the tax are those that sell for over $100,000. Keep this new law in mind when you’re shopping for high-end luxury vehicles and learn more about Canada’s new Luxury Goods Tax with the help from your friends at McGee Motors Cadillac, here in Ontario.

How will the Luxury Goods Tax be Calculated?

The tax will be calculated as the lesser of:

  1. a) 10% of the retail sale price of the subject vehicle, aircraft, or vessel.
  2. b) 20% of the retail sale price above the relevant price threshold ($100,000 for vehicles and aircraft; $250,000 for vessels);

This means if you’re looking to purchase a $140,000 vehicle, the applicable tax would be the lesser amount of the two options above:

  • 10% of the retail sale price 10% @ $140,000 = $14,000
  • 20% of the sale price above the 100k threshold 20% @ $40,000 = $8,000

In this case, the vehicle would be taxed an additional $8,000 under this new tax.

Does My Vehicle Fall Under this Tax?

Passenger vehicles, with a manufacture date after 2018 and sold for over $100,000 are the vehicles included in this tax. This list can include a variety of models including luxury sedans, SUVs, sports cars, trucks and more. However, this tax is also applying retroactively to "written sales agreements" from Jan. 1, 2022 onwards, subjecting deals made after that time to the new Luxury Goods Tax.

Moving Forward With McGee Motors

If you’re looking for a new luxury vehicle and want to get the best bang for your buck, don’t fear, McGee Motors has you covered with multiple models available under the $100,000 threshold. Experience luxury from the Cadillac model lineup and take your hard-earned dollars far with assistance from our team. If you’re looking to avoid the new luxury tax, another possible strategy is to lease your new vehicle rather than financing, as this new tax does not apply to vehicle leasing. Learn more from our finance team, and contact our dealership to explore your options in the face of this new tax.

Contact Us