.png)
The federal government plans to implement the new luxury tax on boats on September 1, 2022.
Therefore, all boats (2019 and newer) that will be sold on or after September 1, 2022 will be taxable, even if the purchase contract was signed well before this date.
The notion of new or used boats subject to the new tax is a bit nuanced for sales made by a dealer, time and case law will tell us more in the coming weeks. But one thing is certain, the new boat of 2019 is more is definitely included.
However, it seems that contracts signed before December 31, 2021 are exempted regardless of the time of final delivery. But it is necessary that the registration of the boat under Transport Canada must have been made before September 1, 2022 in order to avoid taxation at the time of the resale and this even if it is a sale between private individuals. So any boat registered after September 1st 2022 can be subject to the luxury tax even if it is a sale between individuals. Everything is to be checked...
According to the information available, this new tax will be applicable on both new and used boats (for 2019 and older) over $250,000 CAD, but boats already registered in Canada will not be included for this new tax.
This rule should be interpreted as follows (subject to change):
1- Therefore, in general, a boat already owned and registered (before sept 1, 2022) by a Canadian will not be subject to this new tax.
2- A boat acquired and registered in Canada before September 1, 2022 and sold thereafter will be excluded from this new tax.
3- Therefore, a boat acquired after September 1, 2022 and bearing a serial number of 2019 and more, the owner pays the luxury tax at the time of purchase. Upon resale, the next owner will not be subject to this new tax because of rule #1.
4- Therefore, for boats acquired after September 1, 2022, the luxury tax is payable by the first owner who registers the boat in Canada.
5- A boat acquired outside of Canada and entering Canada after September 1, 2022 (for 2019 and older boats) and that was not registered in Canada (with taxes paid) will likely be subject to the new luxury tax.
6- The luxury tax is payable only once for the same boat.
You have the choice between 10% of the contract value or 20% of the excess of $250,000, you take the smaller value between these calculation methods.
Don’t forget that the GST and QST apply to this new tax. So it is a tax on top of existing taxes.
We are waiting for more details on how this will be applied, it is always the finer details that are important.
The brokers at Ita Yachts Canada will be on the lookout for you, so all 2019 and older boats are included in this new tax for now.
In short: a transaction completed before September 1, 2022 is therefore very advantageous for 2019 and older boats that exceed $250,000 CAD if the boat is not yet registered in Canada.
At this time, there are many questions that remain unanswered.
The brokers at Ita Yachts Canada are on keeping on top of this news.
Here is a link to the Government of Canada website about this new tax.
