Luxury Aircraft Tax Starts September 1, 2022

Summary#

This order (SI/2022-36) fixes September 1, 2022 as the day certain parts of the Select Luxury Items Tax Act come into force. Practically, it means the tax rules that apply to sales and imports of certain aircraft take effect on that date.

What it does#

• Fixes September 1, 2022 as the day the provisions of the Select Luxury Items Tax Act that set out the tax on subject aircraft come into force.
• Brings those aircraft rules into line with other parts of the Act that were already set to start on September 1, 2022.
• Confirms that the Act imposes a luxury tax on sales and imports of certain items:
  • vehicles and aircraft with a value over $100,000, and
  • vessels with a value over $250,000.
• Explains how the tax is calculated: the tax is the lesser of 20% of the value above the threshold or 10% of the full value.
• The order does not change the wording of the law or add new requirements beyond what the Act already set out; it only sets the start date for the aircraft rules.

Who's affected#

• Vendors (for example, manufacturers, wholesalers and retailers) who sell subject aircraft in Canada.
• Purchasers (for example, individuals or businesses buying high-value aircraft) who buy subject aircraft in Canada.
• Importers of aircraft who bring these planes into Canada.
• Other businesses involved in sales, brokerage, customs clearance, and pricing of luxury aircraft.
  If it is unclear whether a particular aircraft or sale is caught by the rules, affected parties will need to check the Act or seek advice.

Why it matters#

• Sellers and importers need to be ready by September 1, 2022 to apply the new tax to qualifying aircraft. That can affect pricing, contracts and import paperwork.
• Buyers of expensive aircraft may face a sizable extra cost because the tax can be up to 10% of the full value (or 20% of the amount above the threshold, whichever is less).
• The order removes uncertainty about when the aircraft tax starts, so businesses and buyers can prepare.