Performante

Side stepping all the events going in Ottawa we have bigger problems on the horizon.

We're on the cusp of 7 rate hikes, out of control inflation and RE market and a very good chance we're heading towards a recession. Introducing a luxury tax would be the nail in the coffin for a lot of dealers and lenders but it'll be equally as bad for people who over paid during this COVID induced car market and could be holding car loans that are upside down. It's a recipe for a massive economic disaster.

Crazy Canuck

But it's progressive.

Overdraft

this is news to me…would that mean if I entered a contract/ commissioned a boat last November - for real…. paid deposit et al - and it is was delivered in June…l would dodge the tax??

RDMcG

nobody knows. As of now the dealers have no information and have not had any instruction as to what system changes they have to implement nor how they treat trade-ins etc.

I have a car coming in 6 weeks. Ordered last April. Firm contract. I decided to pay for it completely a couple of weeks ago. Done and dusted-final sale . Of course if the tax applies to it I will have to write an additional cheque for $18k but hopefully the transaction will stand as completed.

Anyway,was aware of the possibility when I ordered the vehicle.

SToronto

My prior comment is based on past tax legislation and it's implementation. Both the preparation for them and after effects. In conversation with my accountant who specializes in taxation. I am applying the same logic here along with what the technical document for the lux tax stated last year. I have not discussed the lux tax with my accountant so no clue on their opinion and I am not a tax expert.

Some comments in red on my previous post.

If it happens this year it'll be tabled in the budget and become effective from budget date forward. This is how these things go.

For agreements entered into, on that day forward. nothing retroactive. This is what was previously stated. If you had a bona fide agreement to purchase prior to the implementation date, you were ok. There was no definition for bona fide agreement. Perhaps a deposit on a bill of sale would count as you are making an agreement to buy a car.

If it's delivery based, then deliveries that day forward unless you can prove you entered into bona fide agreement prior to. If the legislation changes to be based on delivery date, then it would be for deliveries on the effective date and forward. I would guess it would be unless you had a bona fide agreement to purchase before, to account for delivery delays because of pandemic and supply chain.

My guess is that the tax will not be tabled in the Spring budget. But if it is, I doubt it'll go retroactive to April 2021. It'll be from 2022 budget date forward with the same or better provisions than the 2021 technical document.

EDIT - To answer your question, based on the earlier technical document put forth for consultation, yes it would mean you don't pay the tax if for example you entered into the purchase agreement (for real) in November 2020 and took delivery in June 2021. The tax was tabled in April 2021 budget and had provisions for your situation. NOW based on my comments above, I would expect the same provisions to apply should the tax be tabled again in 2022 Spring budget. I doubt they will go retroactive, doesn't seem reasonable. Put all the political banter and flaming aside, it's not reasonable given the current economic and supply chain environment. I've got stuff coming this Spring, so I'm hoping like all others in the same situation that the tax isn't retroactive.

EDIT #2 - I incorrectly stated draft legislation, sorry was going on memory as I've sort of put this stuff out of mind for the last number of months. It should be technical document on the luxury tax. I made the corrections above in orange. Linked here - https://www.canada.ca/en/department-...goods-tax.html

.2PDK

Curious, what's this based on?

SToronto

My guess.

The timing doesn't seem right to impose such a tax given everything that is going on and the continued worries ahead.

westcoastj

From my understanding unless there was a bill of sale, you would still be subject to the tax. Deposit is not sufficient. For example, I had a deposit back in May 2021, car was built in November 2021 with delivery in January 2022. When it was still unclear if tax was going to be implemented, my dealership offered me the option of paying for the car in full on Dec 31, 2021 prior to delivery to ensure that I would be exempt from the tax even if it passed.

SToronto

You have a few points in here. There's nothing from the government that validates your statements. What validates your statement of paying in December and delivery in Jan guaranteeing you to be exempt, is that there is no legislation in place. Folks who believed or were on the fence if the law would come into effect Jan 1 based on December 2021 info, were worrying unnecessarily.

KLOC

A purchase agreement entered into in 2020 had absolutely no chance of being affected by a tax with an effectivity of April, 2021.

The retroactivity to April 2021 didn’t seem “reasonable” given the Jan 1, 2022 implementation.
Personally, I’m not expecting a sudden epidemic of reasonableness to overtake the government prior to Budget 2022.

Tcomegna

There will be no luxury tax anytime soon. My SA made us quite clear as day. I am taking delivery of my GT3 in April and expectation is that it will not be a requirement for me to pay.

Could change .... But probably not.

Performante

I agree, I don't think it's happening.

Here's the quote from the post I made a few days ago...

https://rennlist.com/forums/rennlist...l#post17981310

.2PDK

With crude now skyrocketing and the world in shambles maybe, just maybe JT will defer this to a later day as he doesn't really need it politically at the moment.

Can you imagine the outrage from the far left milquetoasts?

Their ramblings will be worth the price of admission...

Performante

Bad news folks...March 11, 2022 - Ottawa, Ontario - Department of Finance Canada

In Budget 2021, the government proposed the introduction of a tax on the sale of new luxury cars and aircraft with a retail sale price over $100,000, and new boats over $250,000. The tax would be calculated at the lesser of 20 per cent of the value above these price thresholds or 10 per cent of the full value of the luxury vehicle, aircraft or vessel.

To implement this commitment, today the government released for public comment draft legislative proposals. The draft legislative proposals reflect, and respond to, input received during consultations with stakeholders.

The draft legislative proposals released today build on, and replace, the backgrounder that was released on August 10, 2021, as part of the consultation on the proposed Luxury Tax.

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.

Subject to Parliamentary approval, this tax would come into effect on September 1, 2022.

Canadians are invited to share comments on these draft legislative proposals by April 11, 2022, by emailing fin.luxury-luxe.fin@fin.gc.ca.

https://www.canada.ca/en/department-...uxury-tax.html

.2PDK

Looks like time is running out for future buyers...