Luxury Tax and the Select Luxury Items Tax Act
Canada’s Select Luxury Items Tax Act imposes a luxury tax on high-value aircraft and vessels, cars with MSRP above $100,000, and private aircraft & vessels subject to luxury classification. (canada.ca)
Recent Change: Removal on Subject Aircraft & Vessels
- As announced in Budget 2025, effective November 5, 2025, the luxury tax is no longer payable on subject aircraft and subject vessels. (canada.ca)
- This is one of several concessions to high net-worth purchasers in sectors like aviation and marine industries. It reduces cost and taxable barrier for acquisition of such items.
Who Is Affected & What’s the Impact
Affected Purchasers:
- Individuals or entities buying a private aircraft that meets the "subject aircraft" definition under the Act.
- Purchasers of subject vessels, which are legally defined based on size, cost, use, and other parameters. Check the Act for exact definitions. (canada.ca)
Impact Measures:
- Immediate cost savings: the luxury tax (which could be a significant percentage) will no longer be in the purchase price as of Nov 5.
- Increased demand/investment in these sectors—manufacturers and brokers like Bombardier are projecting job creation as a result. (reuters.com)
How To Benefit Now
- If you're planning to buy a subject aircraft or vessel, delay purchase until after Nov 5, 2025, or check if the purchase can be recognized under definitions effective after the change.
- Check vendor invoices carefully—ensure no portion of luxury tax is charged post-Nov 5.
- For recent payments or contracts signed before Nov 5, explore whether transitional rules, refunds, or rebates apply.
Considerations & Caveats
- Definitions matter: what constitutes a subject aircraft or vessel? Size, weight, MSRP, purpose may all be relevant.
- Other taxes or fees still apply (excise duties, import fees, H.S.T/G.S.T etc.). The removal of one tax doesn’t erase all associated costs.
- Future government budgets might revisit luxury tax policies—this could be a temporary removal.
Bottom Line
Removing the luxury tax on subject aircraft and vessels starting Nov 5, 2025, offers a clear financial advantage for buyers in these categories. If this applies to your planned purchase, you could be saving thousands—or more. Act swiftly to benefit under the new rule.