What You Need to Know About Canada’s New Luxury Sales Tax
It’s official, on September 1st 2022, Canada will implement a country-wide luxury vehicle tax on models that sell for over $100,000. The new Luxury Goods Tax will affect the price of new vehicles sold for over the price threshold of $100,000, adding a new wrinkle to your buying decision. Learn more about how this new cost will affect your new vehicle shopping experience at Kingston Dodge, and find your new SUV or pickup truck in Kingston today.
How will the Luxury Goods Tax be Calculated?
The tax will be calculated as the lesser of:
- 20% of the retail sale price above the relevant price threshold ($100,000 for vehicles and aircraft; $250,000 for vessels); or
- 10% of the retail sale price of the subject vehicle, aircraft, or vessel.
For example, a $106,000 vehicle will be taxed to the lesser extent of either option A or B listed above. For this example, the $106,000 vehicle will be taxed an additional $1,200 (20% of value above $100,000).
What Vehicles Fall Under this Tax?
Simply put, vehicles affected by this Luxury Goods Tax are models sold for above $100,000 CAD or equivalent. Passenger vehicles, with a date of manufacture after 2018 are the vehicles included in this tax. This can include everything from sports cars, luxury SUVs, and heavy-duty pickup trucks. Additionally, this tax will also apply to “written sales agreements” from Jan. 1, 2022 onwards in a retroactive measure, so deals made throughout this year will also be subject to the Luxury Goods Tax.
How Kingston Dodge Can Help
Kingston Dodge can help provide you with the right vehicle to fit your needs, and ensure that you don’t pay any more than you have to for your brand-new Dodge, Chrysler, Jeep, or Ram vehicle. We have plenty of options that fall under the $100,000 threshold so you can avoid this inconvenient tax. Additionally, we can help you avoid the tax altogether by leasing your new vehicle rather than financing, as vehicle leasing does not fall under this tax. Connect with us today to learn more about your vehicle buying options and financing plans to get the most out of your money, speak to an advisor to get started.