The Luxury Tax on certain aircraft is set to come into force on September 1, 2022. Specifically, the government has finalized the coming into force date for aircraft to be the same as vehicles and boats included in the scope of the new tax (i.e., "subject" items). Further, the CRA has recently released guidance for businesses required to register as "registered vendors". Specifically, businesses that may be subject to the new tax (e.g., manufacturers, wholesalers, retailers and importers of subject items) should review this guidance for details on the registration process.


The new Luxury Tax applies to subject vehicles and aircraft priced over $100,000, as well as subject boats priced over $250,000, under the new Select Luxury Items Tax Act. In general, the tax will equal the lesser of:

  • 20% of the amount of the total sale price in excess of $100,000 for subject vehicles and subject aircraft and in excess of $250,000 for subject boats, or
  • 10% of the total sale price.

However, the Luxury Tax may not apply on vehicles, boats and aircraft that are purchased by qualifying entities or that are to be used for qualifying activities. The new Luxury Tax was enacted on June 23, 2022, with an effective date of September 1, 2022 for subject vehicles and boats (subject to transitional rules). However, the coming into force date for subject aircraft was to be fixed by order of the Governor in Council (but no earlier than September 1, 2022).

Coming into force date for aircraft

The new Luxury Tax applies to subject aircraft as of September 1, 2022 (i.e., the same coming into force date that applies to subject vehicles and boats). The coming into force date for aircraft was fixed by order of the Governor in Council on July 14, 2022.

Finance has also recently announced that it intends to clarify certain rules related to the Luxury Tax. Finance has stated that it plans to release draft regulations to:

  • Clarify that the existing transitional rules for the Luxury Tax will continue to apply to all subject items, including aircraft
  • Relieve the Luxury Tax on sales of certain aircraft for export at the time the sale is completed by a registered vendor, even if the exportation occurs at a later time
  • Simplify and reduce the reporting requirement for certain automotive vendors.

Luxury Tax registrations for vendors

Businesses are generally required to register under the CRA's Luxury Tax system before selling or importing items subject to the new tax. These businesses may also need to be registered prior to purchasing inventory of subject items in order for these purchases to qualify for exemption certificates and be relieved of the Luxury Tax. Based on its guidance, the CRA notes that the registration application process may take up to 30 days.

In addition, the CRA notes that businesses required to register for the new tax must indicate whether they are registering for:

  • Subject vehicles,
  • Subject aircraft, or
  • Subject boats.

As a result, some businesses may have to register under more than one type of subject item. Businesses may use the new registration form L500 "Luxury Tax Registration Application" or register online.

For more information, contact your KPMG adviser.

Information is current to July 18, 2022. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500