Ex-pats may have to pay luxury tax on cars in Canada
On August 10th, 2021, the luxury tax was initially proposed (2021 budget). To establish the draught legislation, the essential steps were, however, only recently taken on March 11, 2022. Stakeholders were eventually asked to comment on the draught by April 11, 2022. The luxury tax on cars is currently scheduled to go into force on September 1st, 2022. You should get in touch with a Tax preparation expert if you’re interested in learning more about the draft’s specifics, particularly how it will affect ultra-rich citizens and ex-pats.
What is Luxury Tax?
The luxury tax on cars, which is formally known as the Select Luxury Items Tax Act, introduces the term “subject item,” which includes any automobiles, aircraft, and vessels made after 2018.
Any sale of any of these “subject products” by a registered vendor is subject to the luxury tax. To put it another way, if you manufacture boats, for example, and sell a boat made after 2018 on Canadian soil, you must pay a luxury tax to the government.
First and foremost, the luxury tax must be paid by both registered and unregistered merchants that import the aforementioned subject goods into Canada. You should be aware of a threshold quantity, though.
- The $100,000 cutoff price applies to cars and airplanes. You must pay the luxury tax if your transaction exceeds the threshold.
- Any value beyond the $250,000 threshold for vessels will be subject to a luxury tax.
The new regulation mentions an exemption for suppliers, which you need to be aware of. You are instantly qualified for the exemption if you sell the relevant item(s) to a manufacturer, distributor, or retailer who is already registered for the luxury tax.
For further clarifications, contact the international tax consultancy service in Toronto.
How to calculate luxury tax?
The calculation of Luxury Tax is quite simple.
- 20% of the retail sales price for an amount crossing the cutoff amount (as mentioned)
OR,
- 10% of the total retail sales cost.
You should pay the lesser amount as the Luxury Tax. Get in touch with the best tax consultants in Toronto for a clearer idea of the bill.
How ultra-rich and ex-pats are affected by the luxury tax?
You should be informed of the new regulations that affect your business as an ultra-rich person or ex-pat conducting business in Canada. This recently introduced policy will go into force on September 1st. In order to examine your business strategies and maintain a positive outlook, get in touch with ex-pat tax consultants in Toronto who will walk you through the new regulation.
