CANADA: NEW LUXURY TAX ON BOATS GOES INTO EFFECT SEPT. 1, 2022
The federal government implement the new luxury tax on boats on September 1, 2022.
Therefore, all boats (2019 and newer) that will be sold on or after September 1, 2022 will be taxable, even if the purchase contract was signed well before this date.
However, it appears that contracts signed before December 31, 2021 are exempt.
According to the information available, this new tax will be applicable on both new and used boats (for 2019 and more) of more than $250,000 CAD, is applicable for boats sold by a Canadian dealer but excludes this new tax for boats that are already registered in Canada (before sept 1, 2022, taxes in order) and owned by an individual.
So an individual can sell his boat without this luxury tax which is not applicable for a sale between private individuals (via a broker).
The luxury tax is payable only once for the same boat.
A transaction involving a boat imported from the United States may also be exempt from the luxury tax if it can be shown that it was also originally registered elsewhere than in Canada but before Sept. 1, 2022. So a boat from 2019-2020-2021-2022 (until Sept 1, 2022) can be imported in Canada without the famous luxury tax (some conditions apply, must be validated beforehand).
There is a bit of confusion about whether the luxury tax will apply to used boats of 2019 to 2023 ($250,000 CAD and up) sold by dealers. We will see in the coming weeks the notices from the Canada Revenue Agency CRA.
You can choose between 10% of the contract value or 20% of the excess of $250,000, whichever is less.
GST and QST apply to this new tax. So, it is a tax on top of existing taxes.
We are waiting for more details on how this will be applied, it is always the finer details that are important.
So acquiring a boat acquired in the United States that remains in the United States will not be subject to this new tax. It is the same as for the two taxes GST AND QST.
At this time, there are many questions that remain unanswered.
The brokers at Ita Yachts Canada are on keeping on top of this news.
Here is a link to the Government of Canada website about this new tax.
Disclaimer
Ita Yachts Canada offers the information regarding this new tax in good faith but is not able to guarantee the accuracy of the information regarding all details of this new tax. It is the buyer’s responsibility to instruct their agents or attorneys to verify and validate the information of their choice.
