Canada: Proposed luxury tax on vehicles, boats, and aircraft

The new luxury tax would generally be effective and apply 1 September 2022.

Vehicles, boats, and aircraft

The Department of Finance released draft legislation for a new luxury tax regime that would impose new obligations for vendors, importers, and purchasers of subject vehicles, boats, and aircraft, as well as administrative and transition rules.

The new luxury tax would generally be effective and apply 1 September 2022. In general:

  • Sales agreements related to “subject items” would be subject to the new luxury tax, unless the purchaser entered into the agreement in writing before 20 April 2021.
  • The draft legislation outlines the criteria to determine whether an aircraft or a boat is subject to the luxury tax. Special rules would apply for improvements to vehicles, aircraft, and boats, and imports of subject items.
  • When a purchaser provides a specific exemption certificate, the vendor would be granted relief from the application of the luxury tax (including when the purchaser certifies that it is a registered vendor).

The Department of Finance will accept comments on the draft legislation until 11 April 2022.

Read a March 2022 report [PDF 204 KB] prepared by the KPMG member firm in Canada

$=Canadian dollar



The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor 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 on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.