New federal luxury tax and all-in pricing

| Industry bulletins

As of Sept. 1, 2022, the Government of Canada’s Select Luxury Items Tax Act will come into effect, which applies to the sale or importation of certain vehicles over $100,000. If you are unsure if this applies to your business, please contact a tax lawyer, an accountant or the Canada Revenue Agency (CRA) at 1-866-330-3304.

If you are advertising the price of a vehicle where the luxury tax will apply, Alberta’s all-in pricing legislation is still applicable and would need to include the luxury tax within the advertised price of the vehicle. The only fee that can be added to the advertised price is GST and any costs associated with financing (if applicable), as per Alberta’s Automotive Business Regulation (ABR), Section 11(2)(l).

If you sell or import certain vehicles over $100,000, you are required to register with the CRA under the Select Luxury Items Tax Act. For more information on the luxury tax and your federal responsibilities as a business, please contact the Government of Canada.

Automotive businesses have an obligation to create and maintain complete and accurate financial records (Consumer Protection Act, Section 132(1); ABR, Section 9). This includes, but is not limited to, a bill of sale. As per the ABR Section 31.2(1) and (2), certain information must be included on the bill of sale, including any mandatory fees, charges, or costs, and must accurately reflect the nature of the transaction. This includes the luxury tax.

If you have any questions about the luxury tax, please contact a tax lawyer, an accountant or the Canada Revenue Agency (CRA) at 1-866-330-3304.