Overview of the Change
Budget 2025 introduced a sweeping amendment to the Select Luxury Items Tax Act (SLITA): the luxury tax will no longer apply to subject aircraft and subject vessels starting November 5, 2025. (budget.canada.ca)
Vendors and registrants for these categories are relieved from paying the tax on sales, importation, or improvements of these items. Also, they will no longer need to register or file SLITA returns for aircraft or vessels sold or imported after the effective date. (canada.ca)
However, subject vehicles (cars, SUVs) priced above the $100,000 threshold remain in the SLITA regime, so the change does not affect those. (canada.ca)
Actionable Insights for Businesses and Individuals
If you deal in aircraft or boats/vessels, now is the time to update your systems and processes.
- Review contracts and supply chains: Sales agreements or import orders with closing dates on or after November 5, 2025 should reflect no luxury tax liability for subject aircraft or vessels.
- Cancel unnecessary registrations: Vendors only registered for subject aircraft or vessels may cancel registration after this date; however, registrations for subject vehicles must still be maintained. (canada.ca)
- Accounting and invoicing: Remove the tax line for subject aircraft/vessels transactions after November 4. For periods overlapping October 1–November 4, report any payable amounts in the quarterly return ending December 31, 2025. (canada.ca)
Example Scenarios
- Exporter of seaplanes: A vendor exports an aircraft on November 10, 2025. They are no longer obligated to register for SLITA or collect the luxury tax on this transaction.
- Boat dealership: A marine business importing a vessel valued over $250,000 with purchase date tied to November 5 onward will no longer pay luxury tax but must retain records of valuation and import certification.
- Vehicle dealer: A car dealer with luxury cars priced over $100,000 still owes the tax. No change applies.
Compliance and Transitional Requirements
Although the tax ceases, some rules remain in force in the transitional phase:
- Sales or importations before November 5, 2025 are still subject to SLITA for aircraft/vessels. Ensure that any transaction or form with dates prior to the effective date is correctly assessed. (canada.ca)
- Final returns must include these earlier amounts; vendors file quarterly returns—so any aircraft or vessels sales within Q4 2025 must be tracked. (canada.ca)
- Registrations are automatically cancelled on February 1, 2028 for aircraft/vessel vendors. Until then, they will be kept active to allow rebate claims where applicable. (canada.ca)
Key Takeaways
This measure offers significant relief to the aviation and marine industries by removing SLITA obligations on aircraft and vessels. If you're in import, sales, or leasing of such items, you can expect reduced costs and simpler compliance. That said, careful attention is required during the transition to avoid errors in reporting or conflicting invoices.
By aligning your sales contracts, tax registration status, invoices, and internal accounting with these changes, businesses can avoid overpayment, simplify reporting, and maintain compliance.