New regulations set out exclusions, export rules, and transition relief for the federal luxury tax on aircraft, vessels, and vehicles

Plain-language summary · AI-assisted · not legal advice

Canada has enacted formal regulations under the Select Luxury Items Tax Act covering four main areas. First, aircraft and vessels sold under written purchase agreements signed before 2022—or with qualifying pre-2022 deposits—are excluded from the definition of 'subject aircraft' or 'subject vessel,' meaning the luxury tax does not apply to those sales. Second, where only partial ownership of a luxury item is sold, the regulations specify how the taxable amount is calculated and confirm that a second partial-ownership sale linked to the same pre-existing written agreement attracts zero additional tax. Third, registered vendors selling aircraft for export can avoid charging luxury tax if the aircraft is exported promptly, not used in Canada beforehand, and the vendor retains satisfactory evidence of exportation; buyers can also provide a signed exemption certificate to achieve the same result and take on personal tax liability. Fourth, registered vendors who deal solely in subject vehicles must file an information return for each reporting period. Businesses selling or importing high-value aircraft, vessels, or vehicles—especially those with legacy pre-2022 contracts or export sales—should confirm whether these exemptions and calculation rules apply to their transactions.

Who this affects: registered luxury goods vendors (aircraft, vessels, vehicles) · purchasers of high-value aircraft or vessels under pre-2022 agreements · importers of luxury items covered by the Act · businesses selling luxury items for export