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Canadian Luxury Tax on Private Aircraft Is Coming!
By Ian Brown, EAA 657159, Editor, Board member, Canadian Council membership
April 5, 2022 – Your EAA Canadian Council is working with COPA and the Canadian Business Aviation Association (CBAA) to respond to the Canadian federal department of finance and their proposal to impose a luxury tax on aircraft purchases. The proposed effective date is September 1, 2022. COPA/CBAA have requested a delay in implementation until January 1, 2023, and an increase in the threshold to $5,000,000.
Effectively the proposed tax would be at the rate of 20 percent of the added value between $100,000 and $200,000 and a flat 10 percent after that. It would apply to all aircraft considered to be luxury items having less than 40 seats. As an example, if you were planning to buy an aircraft for $150,000 it would result in an added tax liability of $10,000 ($50,000 x 20 percent). Reviewing the consultation document, you will note that GST has been charged on the added tax too, in example 3 for an imported aircraft. It's reasonable to assume that HST/QST would also be charged on the added tax.
The tax will not be charged on any aircraft valued at less than $100,000 nor on aircraft manufactured before 2019.
For some extra detail, the following statement comes from the COPA website:
“Two notable new provisions contained in these draft legislative proposals are as follows: Relief is proposed to be provided to after-sale improvements that are made to vehicles, aircraft or vessels purchased below the relevant price threshold; and relief for aircraft is proposed to be expanded to take into account qualifying flights that are conducted in the course of a business with a reasonable expectation of profit.