Canada’s new luxury tax is coming. What does it mean for consumers?

August 11th, 2022 by

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The Government of Canada has introduced a new luxury tax on the sale of certain vehicles priced above $100,000. This new luxury tax, proposed as part of Bill C-19, Budget Implementation Act, 2022, No. 1, affects the sale of vehicles manufactured after 2018, which means a lot of used vehicles are unaffected!

What is the luxury tax in Canada?

On August 10, 2021, the Department of Finance Canada published a paper on the design of the proposed luxury tax for public consultation. On March 11, 2022, the Canadian Government also released draft legislative proposals for stakeholder input. The proposed tax was approved on June 23, 2022.

The luxury tax will come into effect on September 1, 2022.

Vehicles subject to the luxury tax:

The luxury tax will apply to vehicles priced or valued above the $100,000 price threshold.

The tax applies to all motor vehicles that meets all of the following conditions:

  • it is designed or adapted primarily to carry individuals on highways and streets
  • it has a seating capacity of not more than 10 individuals
  • it has a gross vehicle weight rating that is 3,856 kg or less
  • it has a date of manufacture after 2018
  • it is designed to travel with four or more wheels in contact with the ground

Source: Government of Canada

The luxury tax will apply to the sale of vehicles priced above $100,000 and will be payable at the time the sale is completed. A sale is considered completed when possession of the subject vehicle is transferred to the purchaser or when ownership of the subject vehicle is transferred to the purchaser, whichever is earlier.

How does this impact me?

House of Cars carries hundreds of vehicles built in 2018 or earlier, meaning you, the consumer, don’t have to pay the luxury tax on those vehicles! This new tax only applies to vehicles built in 2018 or newer, and are sold for $100,000 or more. Any vehicle that is 2018 or newer, but is sold for less than $100,000, is not impacted by the new luxury tax.

Another benefit to buying used comes from being able to take advantage of vehicle depreciation. Brand new vehicles depreciate the moment they are driven off the lot. Typically after 3-4 years, a vehicle could depreciate as much as 40%, meaning that $130,000 vehicle could be priced under $100,000 now!

Browse our inventory of vehicles now and shop with confidence today!

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