As published on step.org/industry-news, Tuesday 17 August, 2021.
The Canadian government has opened two consultations on proposals announced in its Budget 2021 earlier this year. One consultation deals with a so-called “luxury tax” on the sale of cars and aircraft and the other addresses a potential tax on vacant homes owned by non-resident foreign nationals.
In the Budget 2021, the government said: “Even as Canadians have sacrificed to keep our economy going through the pandemic, some of the wealthiest have done well. Those who can afford to buy luxury goods can afford to pay a bit more.”
Department of Finance Canada therefore announced a consultation on August 10, outlining its proposals to apply a tax on the sale of new luxury cars and aircraft with a retail price of CAD100,000 or more and new boats costing CAD250,000 or more.
The tax would apply at whichever is lower of either 10 percent of the total price of the vehicle, aircraft or boat or 20 percent of the total price above the CAD100,000/CAD250,000 threshold.
The consultation closes on September 30, with the luxury tax proposed to come into force on January 1, 2022. According to the Budget 2021 document, the measure is estimated to increase federal revenues by CAD604 million over the five years from the 2021/22 fiscal year.
The luxury tax consultation launch follows that announced on August 6, when the government published a consultation on a one per cent annual tax on vacant homes owned by non-resident foreign nationals, in response to the “recent and rapid rise” in housing prices.
The underused housing tax is expected to go into effect on January 1, 2022 on all properties legally owned directly or indirectly, in whole or in part. Eligible persons in the scope of the tax will have to file an annual declaration with the Canada Revenue Agency for each residential property they own.
The consultation closes on September 17 and the tax, if implemented as proposed, is estimated to increase federal revenues by CAD700 million over the four years from the 2022/23 fiscal year.