Question Period Note: 2022-2023 SUPPLEMENTARY ESTIMATES (C) – LUXURY TAX

Why is the Canada Revenue Agency seeking funding in the Supplementary Estimates (C) for the administration of the luxury tax?

• Taxes help pay for the government programs and services that benefit Canadians. A tax system in which everyone pays their fair share requires action on multiple fronts.
• The CRA is seeking $18.2M to administer the luxury tax, which applies to the sale and importation of certain vehicles and aircraft priced above $100,000 and certain vessels priced above $250,000.
• The funding will allow the CRA to expand its processing systems to accommodate the luxury tax and introduce the associated framework to administer the tax.
• Funding is also required for program policy, stakeholder outreach, processing registration applications, capturing quarterly returns, audit support, as well as making required modifications to CRA systems.

Through the 2022-2023 Supplementary Estimates (C), the Canada Revenue Agency (CRA) is seeking $18.2M for the administration of the luxury tax.

Budget 2021 proposed to introduce a tax on the sales, for personal use, of luxury cars and personal aircraft with a retail sales price over $100,000, and vessels, for personal use, over $250,000. The Select Luxury Items Tax Act was enacted in bill C-19 Budget Implementation Act, 2022, No. 1 and came into force on September 1, 2022.

The tax is calculated at the lesser of 20% of the value above the threshold ($100,000 for cars and personal aircraft, $250,000 for vessels) or 10% of the full value of the luxury car, vessel, or personal aircraft.

It is estimated that the luxury tax program will have a population base of approximately 2,500 registrants. As the industry is already well established and the luxury tax is being applied on the existing industry, growth in the registrant population is expected to be minimal.

The funding requested will allow the CRA to expand its processing systems to accommodate the luxury tax and introduce the associated framework to administer the tax starting September 1, 2022. Funding is also required for program policy, stakeholder outreach, processing registration applications, capturing quarterly returns, audit support, as well as making required modifications to CRA systems.

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