Thursday, July 29, 2021
News Canada Seeking to Introduce New Luxury Tax on High-End Cars

Canada Seeking to Introduce New Luxury Tax on High-End Cars

Sharing the wealth.


  • Proposed luxury tax would apply to cars and trucks costing more than $100K.

  • Tax would amount to either 10% of full price or 20% of price exceeding $100K.

  • If the budget is accepted, the tax would go into effect on January 1st, 2022.


The Canadian government announced its proposed 2021 budget today, and buried within the 739-page document is a new luxury tax, which would apply to new high-priced cars, aircraft and boats destined for personal use.

The tax would affect new cars and trucks with an MSRP of more than $100,000, either purchased in Canada or imported from other countries. There are two ways of calculating it, the buyer paying the lesser of two options: 10% of the vehicle’s total cost, or 20% of the amount exceeding $100,000. The luxury tax will be applied before adding sales taxes.

2020 Porsche Taycan 4S | Photo: Olivier Delorme

How much does that amount to? Here are some examples.

$100,000: $0 luxury tax (20% of 0 is, well, 0)
$110,000: $2,000 luxury tax (20% of $10,000)
$125,000: $5,000 luxury tax (20% of $25,000)
$150,000: $10,000 luxury tax (20% of $50,000)
$200,000: $20,000 luxury tax (20% of $100,000 or 10% of full price)
$250,000: $25,000 luxury tax (10% of full price)
$300,000: $30,000 luxury tax (10% of full price)

So essentially, on cars and trucks costing between $100K and $200K, the 20% rule would apply. Past the $200K mark, the 10% rule would produce the lesser amount.

2021 Tesla Model X | Photo: Tesla

Will that prevent high-end luxury brands from selling their vehicles in Canada? Highly unlikely, and the goal isn’t to discourage sales anyway, which would be counterproductive. In the case of the $122,000 Porsche Taycan 4S, on which a $4,400 luxury tax will be added before sales taxes, we find options such as Special Colour paint ($3,590 for Carmine Red, Neptune Blue, Chalk, Ice Grey Metallic), 21” Taycan Exclusive Design Wheels with Aeroblades in Carbon Fibre ($10,010), Olea Club leather ($8,150) and Porsche Ceramic Composite Brakes with High-Gloss Black callipers ($11,370). What are a few thousand bucks more on the invoice?

If the new federal budget is supported by the opposition, the luxury tax would go into effect on January 1st, 2022, and the Canadian government estimates it will increase federal revenues by $604 million dollars over five years, which will help soak up the massive deficit caused by the COVID-19 pandemic. Motorcycles, recreational off-road vehicles, racing cars (which aren’t street-legal), RVs, construction and farm vehicles are not subject to the proposed tax. Final details will be announced at a later date.

Trending Now

There will be Three Versions of the Volkswagen ID. Buzz

The retro-styled ID. Buzz goes on sale in Europe next year, 2024 for North America. Versions will include “ride-pooling”, ride-hailing, and cargo. Level...

New 2022 Toyota Tundra will be More Civilized and Tech-Loaded than Ever

Toyota’s dropped a few hints about the all-new Tundra’s latest features. The Tundra’s exterior appearance was leaked a few weeks ago. The all-new...

Ford Tricks Out Mustang Mach-E to Honour WWI Women Pilots

Ford's 12th custom vehicle to support EAA efforts This Mustang Mach-E decorated to pay tribute to women volunteer pilots For years now, Ford has...

GM Sues Ford Over Cruise in Blue Cruise

GM says Blue Cruise infringes on Super Cruise Suit comes after extensive talks All is not sailing smoothly when it comes to Cruise. General...

Faraday Future is Back from the Dead

Faraday is emerging from years of financial issues thanks to its acquisition with SPAC Property Solutions Acquisition Corp. The Faraday FF 91 was first...

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.