Tax Planning
Luxury Tax Relief: What Buyers of Aircraft and Vessels in Canada Need to Know Post-November 5, 2025
As of November 5, 2025, the luxury tax will no longer apply to aircraft and vessels—here’s how businesses and individuals can adapt and avoid unexpected costs.
By NomadicTax Research Team • 5-8 min read • November 23, 2025
## What’s Changing
Starting **November 5, 2025**, the Government of Canada announced via **Budget 2025** that subject aircraft and subject vessels will no longer be subject to the luxury tax, effective immediately after the announcement on **November 4, 2025**.([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ltn5/ltn5-luxury-tax-not-payable-subject-aircraft-and-vessels.html?utm_source=openai)) This marks a significant shift under the *Select Luxury Items Tax Act*, affecting purchases, imports, registrations, and more.([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ltn5/ltn5-luxury-tax-not-payable-subject-aircraft-and-vessels.html?utm_source=openai))
## Who This Impacts
- **Buyers or importers of aircraft or vessels** priced over the tax thresholds (CAD $100,000 for aircraft; $250,000 for vessels) who were previously paying luxury tax.([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ltn5/ltn5-luxury-tax-not-payable-subject-aircraft-and-vessels.html?utm_source=openai))
- **Registrants or vendors** who handled subject aircraft or subject vessels and dealt with luxury tax compliance, registration or exemption certificates.([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ltn5/ltn5-luxury-tax-not-payable-subject-aircraft-and-vessels.html?utm_source=openai))
- **Customs/import businesses**, brokers, and dealers of high-value recreational or luxury vessels and aircraft. Those activities often triggered special rules under the Act.([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ltn3/subject-vessels-select-luxury-items-tax-act.html?utm_source=openai))
## What Doesn't Change
- **Luxury tax still applies to high-end vehicles** priced above $100,000. The exemption doesn’t extend to subject vehicles.([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ltn5/ltn5-luxury-tax-not-payable-subject-aircraft-and-vessels.html?utm_source=openai))
- **Existing rules on exemptions, registration, filing of tax returns, records, and certifications** for subject aircraft/vessels prior to November 5 remain in effect until transitioned or cancelled.([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ltn5/ltn5-luxury-tax-not-payable-subject-aircraft-and-vessels.html?utm_source=openai))
- **Enforcement, audits, and penalties** for items before the change may still apply. CRA retains the authority to inspect past compliance.([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ltn5/ltn5-luxury-tax-not-payable-subject-aircraft-and-vessels.html?utm_source=openai))
## Practical Steps & Examples
| Actor | Action to Take | Why It Matters |
|---|---|---|
| Business or individual who owns a subject aircraft/vessel | Stop budgeting for luxury tax in upcoming purchases/imports after Nov. 5, 2025 | Buyers will save significant amounts; tax no longer payable on those items. |
| Registered vendors of subject aircraft/vessels | Review whether registration is still required; start planning for automatic cancellation of registration by **February 1, 2028** without further action.([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ltn5/ltn5-luxury-tax-not-payable-subject-aircraft-and-vessels.html?utm_source=openai)) |
| Importers or sellers with inventory bridging period (Oct-Nov 2025) | Ensure accurate filings for the **quarter ending December 31, 2025**, including any payable tax up to Nov. 4.([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ltn5/ltn5-luxury-tax-not-payable-subject-aircraft-and-vessels.html?utm_source=openai)) |
| Tax professionals advising clients | Update tax planning models to remove assumptions of luxury tax on aircraft/vessels; focus on vehicles that remain taxed. |
## Key Compliance Considerations
- Retain all **exemption certificates** and **special import certificates** until at least six years after the tax-exempting transaction.([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ltn5/ltn5-luxury-tax-not-payable-subject-aircraft-and-vessels.html?utm_source=openai))
- Vendors should ensure that **filing and reporting schedules**, especially for the quarter overlapping the effective date, properly capture periods where tax was still payable.([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ltn5/ltn5-luxury-tax-not-payable-subject-aircraft-and-vessels.html?utm_source=openai))
- Prepare for the **automatic cancellation** of registrations related to subject aircraft/vessels by February 1, 2028. Even though tax won’t be owed after Nov. 5, the legal status of registrations and vendor obligations remain until that cancellation date.([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ltn5/ltn5-luxury-tax-not-payable-subject-aircraft-and-vessels.html?utm_source=openai))
## Why This Change Matters
- Buyers save **hundreds of thousands of dollars** depending on the value of aircraft or vessels. Eliminating luxury tax removes a substantial cost component.
- Simplifies paperwork and compliance for niche sectors—those dealing in aircraft and high-value vessels no longer need luxury filings after purchases/imports.
- Aligns government policy with affordability goals and reduces regulation over items used for transport or personal recreation in some ways.
> **Example Scenario**: *A small tourism company importing a subject vessel valued at $300,000 for charter use can stop paying luxury tax if the import date is after Nov. 5, 2025, assuming all other qualifications met*. Before this change, they’d have had to register, provide exemption certificates, and remit luxury tax. Now, only normal import duties and GST/HST apply. This could mean tens of thousands saved.
## Action Plan Checklist
1. **Audit any pending purchases or import contracts** to see if they fall under subject aircraft or vessels post-Nov. 5.
2. **Advisors should revise cash flow forecasts**, adjusting for tax savings.
3. **Registrants review their growth plans**: registrations for aircraft/vessels may become redundant.
4. **Stay updated** via CRA notices in case of further refinements or related changes for vehicles.
This change is just one of several adjustments happening in Canadian tax policy in late 2025. Stay tuned for other announcements—especially for corporations, entities, and cross-border issues.