sailboat canada tax

Buying a Boat in Canada: Taxes and Licenses

Before buying a boat in Canada , ask yourself what type of boat is best suited for your boating likes and interests. A powerboat may come in the form of a weekend cottage, holiday cruiser, a gathering place for dockside entertaining, or a runabout. A lot of boaters like nothing better than seeking adventure on shallow backwaters or finding an idyllic fishing spot.

Once you determine the use for your pleasure craft, you are ready to take care of the details for buying a boat in Canada . 

Buying a Boat in Canada – Practices to Follow for Used Boats

Bills of sale, which convey legal ownership of a boat, are vital to boat transactions. A thorough document trail back to the original builder’s certificate is ideal. However, older yachts (20-30 years old) may not have complete paperwork. In addition to a bill of sale, owners should be able to produce invoices for moorings, repairs, and other services rendered to the vessel during ownership.

Make Sure the Boat Has a Hull Serial Number

Transport Canada (TC) states that all hull serial numbers should be displayed on a pleasure craft before it is sold. If a number is not present, ask the seller to add it and inscribe it on the boat.  Boats built before August 1981 will not have the serial number. The law went into effect during  August of that year.

Registration and Licensing

Pleasure boats in Canada must be registered or licensed if they have motors of 10hp or 7.5kW or more. Boats are registered through Transport Canada’s Canadian Registry of Vessels. 

Applying for a Pleasure Craft License (PCL)

Once you submit an application for a pleasure craft license (PCL), you can start using your temporary number until the permanent number arrives. You need to submit all the appropriate supporting documentation at the time of application. The supporting paperwork includes a picture of the full side of the boat, a copy of the bill or sale or proof of boat ownership, and a copy of your signed government-issued picture ID. 

Your pleasure craft license (PCL) is actually an authorized number that you add to the bow of either side of your boat. The block numbers should be at least 3 inches or 7.5 centimeters high and be displayed in an easily decipherable color that contrasts with the boat’s background color.

Why You Need a PCL

The number of your PCL allows law enforcement to find you in search-and-rescue emergencies. The PCL is free. However, a fine of $250.000 is assessed if you operate your boat without a license.

Registering Your Boat

You will also need to register your vessel when you buy a boat that has, again, at least a 10hp motor. A registration, which should be carried on board, is a number you can use to show legal title. The registration also allows you to fly the Canadian flag on your boat and give it a unique name. If you need to take out a marine loan, you can use a registered vessel as security. Registration costs $250 through Transport Canada.

Both registration and licensing give you an extra measure of safety, as both allow search-and-rescue personnel to find you during emergencies. Registration is also helpful when you are traveling in foreign waters and need to provide documentation to customs personnel.

Obtaining a Pleasure Craft Operator’s Card

To operate any boat with a motor in Canada, you need a boat operator’s license called a pleasure craft operator’s card (PCOC). To obtain the card, you must take a boating course through a program affiliated with Transport Canada. A score of 75% is required to pass the test and receive your card. Test-takers are allowed two attempts at passing.

Paying the Taxes: GST and HST

The Canada Revenue Agency offers information for applying a Goods and Services Tax (GST) or Harmonized Sales Tax (HST) for buying a boat in Canada . The GST and provincial sales tax paid on the boat’s license are applied to both used and new boats. 

Boat owners also pay taxes and fees before or after purchasing a pleasure craft. Some provinces combine provincial and federal taxes in their HST. The province of Alberta does not charge a sales tax.

Some boats are exempt from provincial sales tax (PST) if they are a certain weight. To learn more about your PST, contact the Ministry of Finance in your province for specific details. Taxes are complicated. Therefore, you need to check with your province and the Canada Revenue Agency (CRA) about what exactly you need to pay. You can reach the CRA by calling 1-800-959-8287 with your questions and for updates.

According to Cottage Life , a new luxury tax is required on boats purchased with a $250,000 price tag or higher. The tax specifically is assessed for recreational powerboats, yachts, and sailboats bought in Canada or imported from outside the country. Floating homes and watercraft are exempt.

Boat Construction and Compliance

The construction of your vessel is important when buying a boat in Canada. Most of the pleasure craft powered by a motor is required to carry a Compliance Notice showing the boat met the construction standards during manufacture. Any modifications made to the boat will invalidate the notice. Therefore, make sure the construction of your boat is current for compliance purposes.

The notice is not required for a boat imported for personal use or for watercraft used for racing. It also does not apply to a vessel made with an open construction where traditional methods for building are used.

If you do buy a boat manufactured outside of Canada, make sure the boat’s construction meets Canada’s building standards. Transport Canada features the requirements for various boat constructions on its website.

Boat Insurance

The coverage for your boat insurance policy depends on how you plan to use your boat. For instance, if you use your boat offshore versus inland waters, you generally will pay more for insurance. To ensure the boat with minimum coverage, you will need to cover the boat for theft, malicious damage, fire, loss, and damage occurring while in transit. It should also include third-party liability protection. 

License and Register Your Boat Now

When buying a boat in Canada , visit the Canadian Vessel Registry or give us a call at 1 (800) 419-9569 today. We offer easy registration and licensing through Transport Canada.

By: National Vessel Registry Staff | July 5, 2023

in Boat Registration   

Use the following for reference:

Ita Yachts Canada

Brokerage / Courtage

CANADA: NEW LUXURY TAX ON BOATS GOES INTO EFFECT SEPT. 1, 2022

The federal government  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.

However, it appears that contracts signed before December 31, 2021 are exempt.

According to the information available, this new tax will be applicable on both new and used boats (for 2019 and more) of more than $250,000 CAD, is applicable for boats sold by a Canadian dealer but excludes this new tax for boats that are already registered in Canada (before sept 1, 2022, taxes in order) and owned by an individual.

So an individual can sell his boat without this luxury tax which is not applicable for a sale between private individuals (via a broker).

The luxury tax is payable only once for the same boat.

A transaction involving a boat imported from the United States may also be exempt from the luxury tax if it can be shown that it was also originally registered elsewhere than in Canada but before Sept. 1, 2022. So a boat from 2019-2020-2021-2022 (until Sept 1, 2022) can be imported in Canada without the famous luxury tax (some conditions apply, must be validated beforehand).

There is a bit of confusion about whether the luxury tax will apply to used boats of 2019 to 2023 ($250,000 CAD and up) sold by dealers.  We will see in the coming weeks the notices from the Canada Revenue Agency CRA.

You can choose between 10% of the contract value or 20% of the excess of $250,000, whichever is less.

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.

So acquiring a boat acquired in the United States that remains in the United States will not be subject to this new tax.  It is the same as for the two taxes GST AND QST.

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.

Ita Yachts Canada offers the information regarding this new tax in good faith but is not able to guarantee the accuracy of the information regarding all details of this new tax. It is the buyer’s responsibility to instruct their agents or attorneys to verify and validate the information of their choice. 

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Boatindustry.com

Canada's new boat tax back in law

New step toward special taxation of recreational boats in Canada. Legislators have introduced a new version of the legislation and are inviting input from boaters and boating professionals.

Tax on high-end pleasure boats

For several months now, the Canadian federal government has been planning to tax a series of products considered luxury goods. Alongside planes and cars worth more than $100,000 are new boats worth more than $250,000 (about 180,000 euros). After being announced in April 2021, presented in August 2021, its implementation initially planned for January 1, 2022 had been postponed.

The advertised value of the tax is the smaller of the values between :

• 20% of the sales price above the tax limit (C$100,000 for cars and airplanes and C$250,000 for boats)
• 10% of the total value of the property.

Some adjustments have been made to the original text following initial feedback from stakeholders. In particular, the tax will not apply to improvements made after the purchase of boats bought under the tax threshold.

New implementation schedule

Canadian parliamentary procedure allows Canadians to comment on the proposed legislation by April 11, 2022. If it is then passed by Parliament as part of the Budget 2022 legislation, the recreational boat tax will apply as of September 1, 2022.

While the Canadian boating market is made up of many small boats, the new tax will affect a number of new large boats and could have an impact on local boating.

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Trade Regulation Updates

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Recent News

Luxury tax on vessels, september 1, 2022.

Beginning September 1, 2022 certain vessels imported into Canada will be subject to Canada's new Select Luxury Items Tax Act . This A ct is a revenue generating tool for the government that is directed at affluent Canadians who can afford to purchase these luxury vessels.

The tax will be payable on subject vessels , valued at $250,000.00 CAD or more, at the lesser rate of 20% of the value above $250,000.00 CAD OR 10% of the full value of the subject vessel (inclusive of any duties payable). The tax is also payable on improvements made to subject vessels as well as leased vessels.

Under subsection 2(1) of the Act, a subject vessel is a boat, ship or craft that is designed to be used solely or partially in the water, regardless of whether it has an engine and is manufactured after 2018 that is designed or adapted for leisure, recreation or sport activities.

Specific examples of vessels that could be subject to the regulations are: sailboats, motorboats, yachts, and other pleasure crafts.

A vessel that has already been registered with a government before September 2022, is excluded from this definition, provided that possession was also transferred to the user of the vehicle before this date.

In general, the following vessels are also considered exempt from the Luxury Tax:

• Floating homes (structures that are composed of a floating platform and a building designed to be occupied as a place of residence for individuals that is permanently affixed to the platform)
• Commercial fishing vessels
• Cruise ships

How Is The Tax Calculated?

The tax will be payable at the lesser of 20% of the value above $250,000.00 CAD OR 10% of the full value of the boat plus any applicable duties.

Vessel valued at $400,000.00 CAD Duty rate 9.5%: $38,000.00 Value subject to Luxury Tax: $438,000.00 Amount over 250K: $188,000.00

Pay whichever is lesser:

10% of full value 438,000 x 10% = 43,800

20% of value above 250K 188,000 x 20% = 37,600

Amount of Luxury Tax payable: $37,600 CAD

Duties, taxes and other fees also payable at the time of importation: Duty $38,000.00, GST $23,780.00 and any service fees from your service provider.

Commercial Importations 

Importers, including manufacturers, wholesalers and retailers, who are in the business of selling subject vessels in Canada are required to register with the Canada Revenue Agency (CRA) either online or by submitting an L500 application. This allows for the luxury tax payment to be deferred until the sale of the vessels to the consumer or registration of the vessels for your own use. Registrants are also required to file quarterly reports informing CRA their luxury tax payable using Form B500, Luxury Tax and Information Return for Registrants .

Personal And Own Use Importations 

Registration with the CRA is not required. Payment of Luxury Tax is required, unless the written contract for the sale of the vessel was completed prior to 2022.

Penalties for failing to register when required, claiming to register when not, or non-payment of the luxury tax, depend on the infraction and range from $1,000 to 150% of the luxury tax payable.

Do you need help determining if your imports are subject to this Luxury Tax, or how much you could expect to pay to import a vessel? Contact our Trade Advisor Services for assistance.

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How will Canada’s new luxury tax on boats affect you?

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If you’ve been eyeing a new boat for the cottage and are worried that the new luxury tax is going to scuttle the deal, take heart. Depending on what’s on your wish list, your new boat may not even be affected.  On April 19, the federal government put forth their 2021 budget and announced a luxury tax on the retail sale of new boats priced over $250,000. The new tax affects recreational powerboats, sailboats, and yachts (personal watercraft and floating homes are exempt). It also applies to new imported boats. 

Though pricing varies greatly by make and model, cottage-type boats likely to retail for more than $250,000 include high end wake and tow boats (e.g., 25-foot Super Air Nautique ) and center console offshore fishing boats (e.g., 28-foot Boston Whaler ) . It’s worth noting that there are many high-quality boats in both of these categories that cost less than $250,000. Cabin cruisers, power cruisers, and motor yachts, many of which cost over $250,000, will also be affected by the tax. These boats are popular in places like Georgian Bay, Ontario and have sleeping, cooking, and bathroom accommodations for overnighting or going on extended cruises. The prices reflect the added amenities, starting at $100,000 and running into the millions . 

In practice, the tax would be calculated as the lesser of 10 per cent of the full value of the boat or 20 per cent of the value above $250,000. So, for instance, a $350,000 power cruiser would be charged $20,00 in luxury tax . GST/HST is applied to the final sales price (including the luxury tax) . In Ontario, for example, the buyer would pay additional HST of $2,600 ($20,000 X 13 per cent).

From the government’s perspective, if you can afford a yacht–or any boat over $250,000–then you can afford to pay a little more tax on it. “If you’ve been lucky enough, or smart enough, or hard-working enough, to afford to spend $100,000 on a car, or $250,000 on a boat – congratulations!” wrote Finance Minister, Chrystia Freeland, in the budget’s forward , “And thank you for contributing a little bit of that good fortune to help heal the wounds of COVID and invest in our future collective prosperity.”  

Industry advocates, like National Marine Manufacturers Association (NMMA) Canada, are concerned about the negative impact the luxury tax will have on boaters, dealers, and small communities with boating economies. “ We are ready to work with the government to find new ways to generate revenue,” said Sara Anghel, NMMA Canada CEO, “But we simply can’t support a new tax that would severely damage the boating industry, put thousands of good jobs at risk, and potentially put government finances further into the red.” According to NMMA Canada analysis the impact would include an 18-22 per cent drop in sales volume and losses of $543 million to $670 million for businesses in the recreational boating sector . The part of the budget containing the luxury tax won’t be tabled until the fall and, in the meantime, Anghel plans to fight for amendments and removal. She encourages concerned cottagers to reach out to their local MPs on this issue.

For those eagerly anticipating the delivery of their new boats this summer, there’s no need to worry. The luxury tax comes into effect January 1, 2022.

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Canada to introduce luxury tax on yachts and private jets

The Canadian government is set to introduce a 'luxury tax' on the sale and importation of high-value cars, private jets and yachts, under a new law that received parliamentary approval this week.

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Canada alters incoming Luxury Tax rules

Earlier this week, the Canadian government posted a notice of the final legislation containing the luxury tax, with some changes and wins for the recreational boating industry.

The new, final legislation signals all deals signed before 2022 (by December 31, 2021) will now be exempt from the luxury tax, regardless of delivery date. You may recall the draft version of the legislation had only exempted deals inked before April 20, 2021.

In a message from NMMA Canada president Sara Anghel, she said that this major concession is in direct response to concerns voiced by NMMA Canada, the MTAs and marine companies with Finance political staff and officials. This is in addition to the government previously responding to our advocacy and raising the price threshold for boats from $100,000 to $250,000.

“While the luxury tax is still coming into effect, we can take a moment to celebrate these two wins that will protect revenue and jobs in our industry,” Anghel said in her address.

You can find a copy of the legislation here (see page 259 of the PDF).

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Buying a pleasure craft

From: Transport Canada

If you are buying a pleasure craft (recreational boat) in Canada, you need to make sure it meets legislative requirements (such as those in the Small Vessel Regulations ). Before you operate your pleasure craft, you may need to get a Pleasure Craft Licence and/or a Pleasure Craft Operator Card.

Before you buy a pleasure craft

Before you buy a pleasure craft in Canada, you should make sure it complies with the following requirements:

Hull Serial Numbers only became mandatory on 1 August 1981. Vessels constructed prior to this date will not have a Hull Serial Number.

• Changes to the boat over time may mean that the compliance notice is no longer valid. If you are thinking about buying a used boat, make sure that it still meets the construction standards. You can hire a marine surveyor to examine the boat and let you know what changes (if any) need to be made to bring it up to the standard. You must make sure that a boat you own meets the relevant standard before you operate it.

A Canadian Compliance Notice is not required for a vessel imported for personal use, a vessel used exclusively for racing, or a vessel of open construction built using traditional methods.

• The Canada Border Services Agency (CBSA) will ask you for specific documents as well as information on the boat and the seller to confirm the sale and assess the duties and taxes on the boat. Before buying the boat, contact the CBSA to find out what you will need from the seller to bring the boat to Canada.
• If you will be towing the boat on a trailer, you should know that a trailer is considered a motor vehicle (with requirements that are different from those that apply to your boat). Contact the CBSA to learn more. If you are buying a trailer, contact your provincial or territorial transportation office to learn about any requirements that may apply.
• Since there may be export requirements in the country where you plan to buy the boat (and the trailer if you are buying one), contact the authorities in that country to find out what they are.

After you buy a pleasure craft

Depending on the characteristics of your boat, you may need to obtain a Pleasure Craft Licence from Transport Canada.

Also, before you operate your recreational boat you may need to get a Pleasure Craft Operator Card or otherwise ensure that you meet the requirement for proof of pleasure craft operator competency .

For information on safe boating, contact the Office of Boating Safety or refer to the Transport Canada Safe Boating Guide.

Safe Boating Guide (PDF, 5.5 MB)

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Purchasing a boat from Canada and importing to the US

• Thread starter PDReynolds
• Start date Jan 22, 2013
• Forums for All Owners
• Ask All Sailors

Hi Everyone, I am looking at purchasing a boat that is located in Annapolis, but the flag of registry is Canada. I believe the boat is manufactured in the US by Beneteau. Can some one help me plan for this? I will be registering my boat in Rhode Island. What steps would I need to do associated with US Customs. thanks  

Check and see what are the tax implications and consider maintaining the Canadian ownership registry if it would pose a significant advantage. The state of Rhode Island is only likely to care that you register the boat and pay the decal yearly fees.  

Canada needs their 13% - 15% provincial tax for any boat purchased and registered in a Canadian province. If I am not mistaken registration would be tied to country of residence also. I am not so concerned about RI, but more about the US border, or what the local port of entry will require.  

PDReynolds said: Canada needs their 13% - 15% provincial tax for any boat purchased and registered in a Canadian province. If I am not mistaken registration would be tied to country of residence also. I am not so concerned about RI, but more about the US border, or what the local port of entry will require. Click to expand

waternwaves

I have seen this done to take advantage of the exchange rate. there are a few pitfalls, especially if the hull already has a convoluted title through the NVDC However, If you take posessions in international waters, and take the boat back to the US, you absolutely must have with you fully signed and detailed transaction documents and bills of sale that exactly match the names and IDs of the boat at each point in its past. Any slight difference in the history of the boat can make getting current US Coast guard registration a tedious process. customs/Homeland security can provide you with the necessary forms required on bringing the vessel in, but I have seen that is much easier than getting corrected docs through the NVDC. One of the things that will be difficult to document is the previous history. The us NVDC will have record if the boat started as a US vessel, however if it was exported to a dealer in Canada..........who knows. I saw an american built boat, originally documented, expired, sold to canada, expired, registered in province, Canadian national registration reapplied for, and through all this and errors in the Hull ID and first two vessel owners name. Then came the difficulty of deregistering a boat when you are not a canadian, it seems only the previous owner can do that in canada. (another stumbling block) and of course we cannot have registration current in 2 countries now could we???? When it came time to re-import that boat back from canada..... well it can be fun. IT can be a trying process. IF it was not for the professionalism and can do attiide of the NVDC, that boat would probably be still sitting in Western Canada.. Talk with the current owners, Get copies of all current documents, if not current at this time, make the registration current before the sale. Dont skip steps. Dont let anyone die during the process. have fun.  

Not necessary to Doccument your boat with the NVDC. Nice for the bank if you can, but difficult to dredge up all that history.  

I bought my used Hunter 33.5 from a broker in Toronto, Canada. I live in Rochester, NY and also border Lake Ontario. I paid the broker an agreed upon price. They did not charge tax because the boat was leaving Canada. When I sailed it to Rochester, New York, I had to call the US Customs folks and explain that I bought a US made boat and sailed it back to the US from Canada. There was no problem doing this. I then had to register the boat with the NY Department of Motor Vehicles. They collected sales tax on the amount I paid. I then documented the boat myself with the US Coast Guard. I filled out their forms and mailed it in. The documentation certificate was sent to me a couple of months later as I recall.  

Very interesting. Another twist here is I cannot document the boat with the US coastguard. I am a Canadian citizen and therefore must register the boat in a state. I am living and working in New England So the boat is sitting on the hard in Annapolis. I am planning to launch and sail her to Rhode Island and keep her near my home. Appreciate everyone's thoughts here. I have not placed the offer on the boat yet  

Bob 04 H260

PDReynolds said: Very interesting. Another twist here is I cannot document the boat with the US coastguard. I am a Canadian citizen and therefore must register the boat in a state. I am living and working in New England So the boat is sitting on the hard in Annapolis. I am planning to launch and sail her to Rhode Island and keep her near my home. Appreciate everyone's thoughts here. I have not placed the offer on the boat yet Click to expand

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Boaters, Taxes & Fees

Hst, pst and gst.

When provinces instituted the HST tax to replace the federal (GST 5%-7%) and provincial sales tax (PST 6%-10%), boaters suddenly started paying much more tax on previously exempt services. ( Provincial taxes ) For example, a cost of $5,000 increased from $5,250 to $5,650 after taxes in Ontario. HST cut costs for businesses, but of course savings were never passed down to customers. Here's a list of marine services affected:

Canadian Luxury Tax on Boats

Starting September 1, 2022, boats 2019 and newer that are sold in by a Canadian dealer may be subject to a luxury tax . The tax is either 10% of the contract value or 20% of the excess of $250,000, whichever is less . The luxury tax is payable only once for the same boat. Existing taxes (GST/PST/QST) apply to the entire cost of the boat plus the new luxury tax - basically a tax on a tax. An individual can sell an expensive boat without paying the luxury tax since a broker is not involved. Boats owned by an individual and already registered in Canada (taxes in order) are excluded.

The luxury tax also applies to planes and cars worth more than $100,000. Other pricey items such as RVs are not being taxed — unless they are classed as cars. The tax is expected to raise $163 million in new revenue per year, an amount that will certainly be negated by administration costs. (This amount would be a rounding error in many federal programs.) The worst effect will definitely be a large reduction in economic activity in the marine and tourism industries .

To stay informed or fight government proposals, you should do the following:

PST (provincial sales tax) only applied to goods (boats, equipment), whereas HST applies to both goods and services (boats, repairs, dockage, storage) in most cases. Here is a timeline of provincial taxes.

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Importing marine pleasure craft

• Canadians and Permanent Residents

Marine pleasure crafts include any kind of vessels such as boats, fishing boats, yachts, dinghies, tenders, motorboats, sailboats, personal watercraft, etc., as long as they are used for non-commercial purposes.

If you are a Canadian resident importing a marine pleasure craft, you must report your purchase to the Canada Border Services Agency ( CBSA ) upon entering the country.

Importing at a land border crossing

If you are importing a marine pleasure craft at a land border crossing, you must declare it to the border services officer; all processing will take place at that location. You must also declare the boat trailer if you have purchased one with the vessel. Please ensure that you have the bill of sale and proof of ownership ready to present to the officer.

Travellers towing watercraft and equipment across borders must ensure that they are not unintentionally transporting zebra or quagga mussels. Learn more here: Towing watercraft and equipment across borders .

Importing at a marine border crossing

If you are importing your marine pleasure craft into Canada over water, you must report to a designated marine site and call the CBSA telephone reporting centre ( TRC ) at 1-888-226-7277 immediately upon your arrival. You must declare the importation of the vessel to the border services officer at the TRC and follow his or her instructions. If processing cannot take place at the marina, you may be required to report to the closest CBSA office, where you will need to pay any applicable duty and taxes. Please ensure that you have the bill of sale and proof of ownership ready to present to the officer.

Important information

For more detailed information on licensing and registering marine pleasure crafts, please visit the Service Canada and Transport Canada Web sites.

You are obligated by law to declare the importation of your marine pleasure craft to the CBSA upon its initial arrival in Canada and pay all applicable duty and taxes, regardless of where the vessel is licensed or registered. Failure to do so may result in penalties or other legal action being taken against you. As of September 1, 2022 , a luxury tax applies to select vessels that have a taxable amount over $250,000. For more information, refer to Luxury tax - Canada.ca

It is recommended that you keep proof of your CBSA declaration or payment of duty and taxes on board the marine pleasure craft for future reference, particularly if you take frequent trips outside Canada.

How Canada's luxury tax on cars and boats works

In simple terms, the tax applies to cars and private aircraft that cost more than $100,000 and to boats or yachts of over $250,000

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A boat has sometimes been described as a hole in the water into which you pour money, and that witticism has become more apt since Canada’s new Select Luxury Items Tax Act came into effect on Sept. 1, 2022.

By imposing a substantial new tax on luxury automobiles, airplanes and boats, the federal government has stated that it expects to increase federal revenue by $604 million over the first five years. The move is in line with the current government’s promise to ensure “that all Canadians and businesses contribute their fair share to a stronger economic recovery.”

The new luxury tax is one of several proposed measures intended to achieve this goal, along with higher corporate taxes, the establishment of a minimum 15-per-cent tax rule for “top-bracket earners” and a crackdown on “aggressive tax planning and avoidance.”

How much tax is payable?

In simple terms, the luxury tax applies to cars and private aircraft that cost more than $100,000 and to boats or yachts of over $250,000. The tax payable is 10 per cent of the total retail cost, or 20 per cent of the amount by which the cost exceeds the price threshold, whichever is lower. For example, the tax on a car priced at $120,000 would be 20 per cent of $20,000 ($4,000), in preference to 10 per cent of $120,000 ($12,000).

Products manufactured in 2018 or earlier are exempt, as are cars, planes and boats used for utilitarian purposes only, such as floating or mobile homes, ambulances and rescue aircraft, or, to use one example offered by the Finance Department, speedboats used by a school to teach waterskiing.

“An important detail is that this tax is applicable to the vendor, which is quite different from an HST or GST that the consumer pays,” says Dino Infanti, Vancouver-based partner and national leader for enterprise tax with KPMG in Canada.

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Vendor responsibilities

Infanti says that vendors “need to be registered, and they’ll have to file a luxury tax return.”

Those in the business of selling these luxury items – manufacturers, wholesalers, retailers or importers – must complete an application process to register themselves. Tax officials have estimated that it may take about 30 days to complete the process.

A car-leasing company that does not normally sell cars as part of its core business is not required to register or to pay any luxury tax. However, if a company usually both sells and leases cars, it is required to register.

Vendors need be registered. As with many taxes, failing to comply may result in penalties, and those penalties could be significant, Infanti says.

When is the tax applied?

The luxury tax was first introduced as part of Bill C-19 in April of 2022. Subsequently, amendments to the legislation were introduced, including one that could have set a different coming-into-force date for certain aircraft than for cars or boats. However, in July 2022, the government made it clear that the Sept. 1 date would apply to all “subject items,” including aircraft.

Upgrades are taxable, too

For registered vendors, it gets even more complicated. Extra features, accessories or upgrades installed within a year of the initial acquisition are subject to the tax. This might have the effect of pushing the selling price over the tax-exempt threshold, thus causing a vehicle to become taxable when it would not have been in its pre-modification state.

For a car, taxable upgrades include custom rims or seats, an audio system or a performance exhaust system. Upgrades that would be included in the cost of a vessel could include “custom cabinetry; onboard lighting; a navigational chart plotter; and a satellite voice and data system.” Modifications that are specifically intended to adapt the item for use by someone with a disability are not included in the calculation.

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It’s important to note that the luxury tax is considered as part of the total price, so GST or HST are levied on top of the tax amount.

Dino Infanti points out that “a question one might have is whether the price threshold might increase; it remains an open question as to whether these thresholds would be indexed to inflation.”

The good news for consumers is that they will not have to calculate the tax themselves. However, Infanti says, “for those who are in this asset class, at the end of the day, the vendor is going to be subjected to this tax, so the consumer is going to pay more.”

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• Canada: Tax measures in 2024 budget (Quebec)

No changes to corporate or individual (personal) income tax rates

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Quebec’s Finance Minister on 12 March 2024 delivered the 2024 provincial budget.

Although the budget does not include any changes to the corporate or individual (personal) income tax rates, it does propose changes to:

• The refundable tax credit granting an allowance to families
• The tax credits for the development of e-business
• Other corporate tax credits

The budget also announces a gradual elimination of the rebates on the purchase of electric vehicles

Read a  March 2024 report  [PDF 218 KB] prepared by the KPMG member firm in Canada

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.

Is the carbon tax suffering from a failure to communicate?

Did the liberals' own changes to government advertising rules leave them at a disadvantage.

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Attacks on the carbon tax are both easy and counterintuitive.

The federal price on carbon, implemented in 2019, is still relatively new. After a period of unusually high inflation, Canadians are newly sensitive to the price of goods and necessities. And the carbon tax, by design, increases each year (on April 1, in fact).

Meanwhile, the benefits that derive from putting a price on carbon, and the greater economic and environmental harm that might result from lacking such a policy, are not immediately tangible — although Canada's greenhouse gas emissions are falling.

So when Conservative leader Pierre Poilievre encourages his supporters to chant "axe the tax" and "spike the hike," he's aiming at an easy target.

But unlike most other taxes, and everything else that could be said to be contributing to the cost of goods, the carbon tax comes with a rebate. In fact — as its proponents like to point out — it's estimated that most households receive more from the rebate than they pay in added costs created by the tax.

• Trudeau calls out 'short-term thinker' politicians as some premiers urge him to drop carbon price hike
• Furey asks Trudeau to halt carbon tax increase, citing few options for consumers in N.L.
• Analysis What happens when a provincial government defies a federal law? We're about to find out

Given that most people — particularly those with lower incomes — are expected to receive more from the rebate than they pay in additional costs, many households might actually end up worse off if the carbon tax is repealed .

For the sake of comparison, consider federal excise taxes on fuel , which long predate the carbon tax. Since 1995, the excise tax has added 10 cents to every litre of gas. The resulting revenue is not rebated directly to households (although some people with a mobility impairment can apply for a partial refund).

But no opposition leaders or premiers are clamouring right now for Prime Minister Justin Trudeau's government to repeal those excise taxes — perhaps because they generate $5 billion annually for the federal government, $2 billion of which is distributed to provinces to fund municipal infrastructure.

But the political value of carbon tax rebates depends on Canadians being aware that they're receiving them . A lack of public awareness might explain why the federal government recently changed the name of the payment from the Climate Action Incentive to the Canada Carbon Rebate .

If a rebate falls in a bank account and no one hears it

In January, Abacus Data asked Canadians in provinces where the federal carbon tax is applied whether they had received a payment from the federal government in the past week. Of the 49 per cent who said yes, the vast majority correctly identified it as a rebate connected to the carbon tax. But that still left 51 per cent who said they hadn't received a rebate.

In fact, the federal government sent carbon rebates to 12 million Canadians in January.

That finding by Abacus might be affected by the fact that, in the case of married and common-law couples, only one person receives the rebate. But the result only gets slightly better for the Liberal government when the question is worded more broadly. In November, a quarter of respondents told the Angus Reid Institute that neither they nor their household had received a rebate in the past year. (Another 12 per cent weren't sure.)

Even among those who had received a payment, 54 per cent said they paid more in the carbon tax than they received in rebates.

Several factors may be undermining the Liberal government's communication efforts. While energy suppliers specify the federal carbon charge on the bills they send to customers, banks are not obliged to clearly label the rebates when deposits are made to Canadians' accounts.

But when David Coletto at Abacus released his findings in January, he suggested another possible explanation — the restrictions on government advertising the Liberals implemented in 2016.

From 2009 to 2015, the previous Conservative government spent tens of millions of dollars promoting what it called "Canada's Economic Action Plan" — a slogan used at first to promote the government's belated response to the Great Recession and then applied to a broad swath of Conservative policy. The opposition parties howled at the use of public funds to promote the sitting government.

When the Liberals came to office they not only slashed spending on advertising, they also created new rules and oversight to limit how government advertising could be used. Ads produced by the federal government are now required to be "objective, factual and explanatory" and cannot be "self-congratulatory or self-praising in nature."

Is this a failure to communicate?

If you want to know how persnickety the non-partisan reviewers of ads can be, the changes to ad scripts are posted publicly . In 2019 , an ad proposed by the Canada Revenue Agency was flagged because one phrase — "the new Climate Action Incentive is making a cleaner economy more affordable for everyone" — was deemed to be self-congratulatory.

It's impossible to know exactly what the Liberals might have done in the absence of those rules. It's possible that the carbon tax and rebate would now enjoy better support (or at least broader awareness) if it had been promoted like the Economic Action Plan.

But if it was a gross abuse of public funds when the Conservatives did it, it would be a gross abuse of public funds now. (Coletto was not specifically recommending that kind of massive advertising campaign.)

Perhaps there's some acceptable middle ground between the relatively restrained advertising of recent years and how government advertising budgets were used in the past. But the Liberal government's struggles to defend the carbon tax might simply indicate new challenges all governments face in communicating with voters — another idea Coletto has written about in recent months.

Convincing voters to accept a new tax (even with a rebate) might be an eternal challenge ( Brian Mulroney  knew this well). The fragmented media environment of 2024 might make it even harder. But if gaps in public awareness suggest the Liberals need to make more of an effort, it doesn't necessarily follow that such an effort needs to involve government ads.

It's also fair to ask whether the arguments Trudeau's government has made have been good enough.

Trudeau defends carbon tax policy as premiers call for pause on increase

In fairness to the Liberals, they might have assumed the carbon tax debate ended with the 2021 election — when the Conservatives, including Poilievre, ran on a platform that included a proposal to put a price on carbon . But just how much of the fight remains to be fought was demonstrated when Trudeau spent more than seven minutes in Calgary on Wednesday responding to a reporter's question about the carbon tax .

"Your question, Rick, is sort of, well, that all makes sense, why are so many people still against it?" Trudeau said to the Calgary Sun's Rick Bell after laying out the logic behind the federal government's decision to implement a carbon tax. "Well, that's a question that we all have to ask."

Maybe that's a question for everyone to ask. But it's most pertinent for Trudeau himself.

In response to an earlier question about the carbon tax, Trudeau said he understood that there's a lot of "political misinformation and disinformation" about the policy. But if "misinformation" is polluting the debate, that only increases the burden on Liberals, as the authors of the policy, to cut through it.

Voters may ultimately decide they don't want the carbon tax. If that happens, the first question to be asked will be whether Trudeau and his government did enough to sell it.

ABOUT THE AUTHOR

Senior writer

Aaron Wherry has covered Parliament Hill since 2007 and has written for Maclean's, the National Post and the Globe and Mail. He is the author of Promise & Peril, a book about Justin Trudeau's years in power.

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Students: Are you ready for tax season?

March 13, 2024

Ottawa, Ontario

Canada Revenue Agency

Filing your tax return is nothing new. This year’s theme is life events: we know there are a lot of little moments that can add up to big changes in life. To help you report important life changes for tax season, the Canada Revenue Agency (CRA) has some useful tips and information.

Filing and payment deadlines

Tax season opened on February 19, 2024 , and you can use a host of methods to file your 2023 income tax and benefit return online. The deadline for most Canadians to file a tax return and pay any amount they owe is April 30, 2024 . 

If you or your spouse or common-law partner are self-employed, both of you have until June 15, 2024 , to file your tax returns. As that date falls on a Saturday, your return will be considered filed on time if the CRA receives it or it is postmarked on or before June 17, 2024 . Just keep in mind that if you owe money to the CRA, your payment is due on  April 30, 2024 .

Tuition and education expenses

We know how expensive school costs can be but don’t be discouraged, you may be able to claim an education-related deduction or a credit on your tax return. Here are a few you could be eligible for:

• Tuition tax credit : If you are 16 years or older, you may be able to claim your tuition fees at a post-secondary institution as a credit to reduce the taxes you pay on your return. You may also be able to claim fees paid to take an accreditation examination for a profession or trade in Canada. You can also transfer all or part of your current year’s federal tuition fees, or other education amounts to a designated person , or you can carry the credit forward to claim on a future tax return.
• Moving expenses : You may be able to claim moving expenses if your new home is at least 40 kilometres closer (by the shortest public route) to your new school or your new work location.
• Interest paid on student loans : You may be eligible to claim part of the interest you’ve paid since 2018 on your student loans for post-secondary education if the loans were issued under certain student loan acts.

Isn’t it great how many resources are available to you!

Benefit and credit payments

You might be entitled to regular benefit or credit payments like the goods and services/harmonized sales tax (GST/HST) credit or the Canada child benefit:

• Those under 19 who have or have had a spouse, common-law partner or child they live(d) with are also eligible.
• If you have a child under 18 years, the  Canada child benefit  is a tax-free monthly payment that helps with the cost of raising your family.
• We invite you to visit the Taxes and benefits for Indigenous Peoples webpage, which offers information about tax filing, as well as benefits and credits for Indigenous Peoples. Visit this webpage for helpful tips, resources and guides to help answer your questions about First Nations, Inuit and Métis taxes.

International students

If you are an international student studying in Canada, you could be eligible for the GST/HST credit and Canada Carbon Rebate even before filing your first tax return. 

Visit  Benefits, credits, and taxes for newcomers  for details on how to:

• Determine your residency status
• Get a social insurance number
• Apply for the benefits and credits you are eligible for

Did you know that you could be a resident of Canada for income tax purposes even if you’re an international student? Your residency status for income tax purposes is different from your citizenship status. When you have enough residential ties in Canada, you will need to file a Canadian tax return. Read more about  determining your residency status .

Working while studying

If you’re working and going to school, here are some things to keep in mind:

• Keep records like emails, contracts, purchase receipts, sales invoices, and any other documents about your sources of income. These will help when it’s time to file your return.
• If you work for clients online, you may be considered to be self-employed . As a self‑employed individual, you have different tax obligations than an employee. 

Studying abroad

Are you planning to study abroad? You may still be considered a resident of Canada and will need to file a Canadian tax return due to your residential ties .

In some cases, you may be considered a factual resident or a non-resident for income tax purposes, so it’s important to know your tax obligations.

If you have returned to Canada after studying abroad, make sure to check your residency status to know about your tax obligations for the 2024 tax season. 

Buying and selling

Navigating a new city, new digs or new responsibilities can be overwhelming. But don’t worry, we’ve got you. Here are some resources to help you out:

• You can open a First Home Savings Account to save for your first home tax-free (up to certain limits).
• With the Home buyer’s amount , you may be able to claim a non-refundable tax credit for the purchase of a qualifying home.
• For more information, check out our tax tip for first-time home buyers .
• Selling your home : In most cases, you won’t pay tax on the money you make from selling your home. If you generated an income with the home you plan to sell, you must report the sale of your home on your tax return. Learn more about property flipping rules and the tax implications of selling your home .

Digital services

Take advantage of our digital services and make life easy:

• My Account  lets you check when your next benefit payment is, if you have uncashed cheques, the status of your tax return (and refund, if you’re getting one), if your personal information is up-to-date, and so much more.
• Sign up for direct deposit  to get your tax refund and benefit payments deposited directly into your account.

Repayment options

If you end up owing money to the CRA and you aren’t able to pay it all at once, you can set up a payment arrangement to pay your balance over time.

Changes to your personal information

Did you enjoy a recent trip down the aisle? Don’t forget to notify the CRA if your marital status has changed. If there have been any other changes in your life, like to your address or phone number, you can use My Account to let us know. My Account is the easiest way to update your personal information, so you don’t miss out on any benefit and credit payments you may be eligible for.

Free tax clinics

Organizations with the  Community Volunteer Income Tax Program host free tax clinics to complete tax returns for eligible individuals. If you have a modest income and a simple tax situation, a volunteer may be able to do your taxes for you, for free. Tax clinics can be in person or virtual.  Find the right clinic for you .

Let’s talk about it

If you have further questions, you can ask them in real-time with Charlie, our friendly chatbot. You can find Charlie on the CRA home page and on many of our other web pages on Canada.ca .

Life-long learning

This filing season shouldn’t keep you up at night. We’ve developed a self-paced, online learning tool called Learn about your taxes to help you understand how the Canadian tax system works. The tool includes lessons, quizzes, and videos to break down everything you need to know, from starting to work to preparing to do your taxes .

Media Relations Canada Revenue Agency 613-948-8366 [email protected]

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