Canadian Buyers: Luxury Tax
07-28-2022, 03:09 PM
#16
Wishing OP the best of luck with delivery timing.
Unfortunately, I think it’s only a matter of time before the US sees the implementation of a luxury good VAT scheme à la Europe. Will make these cars that much more expensive.
Unfortunately, I think it’s only a matter of time before the US sees the implementation of a luxury good VAT scheme à la Europe. Will make these cars that much more expensive.
The following users liked this post:
GuardsRed992 (07-28-2022)
07-28-2022, 03:49 PM
#17
Rennlist Member
Join Date: Feb 2009
Location: Newport Beach, CA and Melbourne, Australia
Posts: 4,339
Received 2,876 Likes
on
1,516 Posts
We've had a 33% luxury car tax in Australia for years. Payable on the final price above $71k or so, including GST. Why a base 992 is over $200k US there. But people still buy them, the Government knows they will even though the original excuse for the tax, to protect a local car industry, has long since gone.
The following users liked this post:
GuardsRed992 (07-28-2022)
07-28-2022, 04:01 PM
#18
Three Wheelin'
The following users liked this post:
icanthelpit (07-28-2022)
07-28-2022, 04:27 PM
#19
Just to clarify, the luxury tax is of 20% of the value above 100k up to 200k, and then of 10% on the total value over 200k. Think of it as a progressive tax rate that kicks in at 100k and progressively increases to 10% up to 200k.
The tax applies at the moment the title transfer occurs, which is usually when the car is registered/plated in the province. What is even worse is that PST and GST are applied over the luxury tax, so here in Quebec where we have ~15% GST+PST, it is really a 11.5% tax (for a car above 200k).
I an really pissed about this tax. It is reputed that it will bring in 120M CAD per year, that’s ~$3 per citizen. What difference will it really make.
The tax applies at the moment the title transfer occurs, which is usually when the car is registered/plated in the province. What is even worse is that PST and GST are applied over the luxury tax, so here in Quebec where we have ~15% GST+PST, it is really a 11.5% tax (for a car above 200k).
I an really pissed about this tax. It is reputed that it will bring in 120M CAD per year, that’s ~$3 per citizen. What difference will it really make.
The following users liked this post:
KLOC (07-29-2022)
07-28-2022, 04:45 PM
#20
I think Leases are exempt
Will the Luxury Tax apply to leases?
A lease of a subject item is not considered to be a sale under the Luxury Tax regime. Lessors that carry on a business of leasing, but not selling, are not required to register and the Luxury Tax would, instead, apply when the lessor purchases a subject item. The cash flow effect of this tax should be considered when determining upfront charges and periodic lease payments charged by the lessor to the lessee. Registered vendors that lease subject items would be required to self-assess the tax when moving the subject item from inventory to lease. This reporting requirement will need to be closely tracked by registered dealerships that also lease subject items.
The following 2 users liked this post by gthal:
GuardsRed992 (07-28-2022),
KLOC (07-29-2022)
07-28-2022, 05:02 PM
#21
If it makes you feel better some states in the US have a yearly excise tax. In MA, it is $25 for every $1000 of value. And the state decides what the value of your car is based on the model/year etc. So a $130K Porsche will net you a surprise bill of $3250 come the beginning of the year. The longer you keep, the less you pay so its one reason to hold on to the car a bit longer. And there is no escape for leases, it gets rolled in to the payments.
much better than CA which is on the Canadian model of $ confiscation
The following users liked this post:
verstraete (07-29-2022)
07-28-2022, 07:41 PM
#22
Burning Brakes
What I get out of the same source is that the tax is levied on the dealer when the car moves out of inventory. This leaves it up to the dealer as to how they will recoup it (and you know they will), making the question of financing largely moot.
07-28-2022, 08:46 PM
#23
Let's face it, we're getting slowly taxed to death in Canada. Most won't mind paying the luxury tax as it'll probably encourage them to become much more creative at avoiding or lowering taxes elsewhere resulting in a zero-sum game. Laffer's curve or whatever...
07-28-2022, 10:11 PM
#24
Three Wheelin'
If it makes you feel better some states in the US have a yearly excise tax. In MA, it is $25 for every $1000 of value. And the state decides what the value of your car is based on the model/year etc. So a $130K Porsche will net you a surprise bill of $3250 come the beginning of the year. The longer you keep, the less you pay so its one reason to hold on to the car a bit longer. And there is no escape for leases, it gets rolled in to the payments.
What pisses me off most is how they are targeting car enthusiasts over all others. Comparing with my friend who likes boating and uses his disposable income for this hobby, he buys a 200k boat plus a big 100k pick-up truck with a 10k trailer to haul it around and yet pays no additional tax.
Last edited by CanAutM3; 07-29-2022 at 07:17 AM.
07-29-2022, 12:56 AM
#25
Race Car
The WEF has openly stated that they want to get rid of private vehicle ownership. First it’s a tax on the rich, because the poor hate the rich. Then once laws are established, you move down the line, and eventually make car ownership cost prohibitive for lower incomes.
07-29-2022, 09:19 AM
#26
Drifting
I think Leases are exempt
Will the Luxury Tax apply to leases?
A lease of a subject item is not considered to be a sale under the Luxury Tax regime. Lessors that carry on a business of leasing, but not selling, are not required to register and the Luxury Tax would, instead, apply when the lessor purchases a subject item. The cash flow effect of this tax should be considered when determining upfront charges and periodic lease payments charged by the lessor to the lessee. Registered vendors that lease subject items would be required to self-assess the tax when moving the subject item from inventory to lease. This reporting requirement will need to be closely tracked by registered dealerships that also lease subject items.Last edited by kayjh; 07-29-2022 at 09:20 AM.
07-29-2022, 09:25 AM
#27
Drifting
Thanks, but it does not make me feel much better as we already have such a tax imbedded in out yearly licence fees. It is 1% of the black book value over 40k CAD. So I already pay ~2k CAD a year more just to get my car plated here in Quebec (the base license fees are about $200).
What pisses me off most is how they are targeting car enthusiasts over all others. Comparing with my friend who likes boating and uses his disposable income for this hobby, he buys a 200k boat plus a big 100k pick-up truck with a 10k trailer to haul it around and yet pays no additional tax.
What pisses me off most is how they are targeting car enthusiasts over all others. Comparing with my friend who likes boating and uses his disposable income for this hobby, he buys a 200k boat plus a big 100k pick-up truck with a 10k trailer to haul it around and yet pays no additional tax.
07-29-2022, 09:33 AM
#28
Burning Brakes
Best of luck.
07-29-2022, 09:53 AM
#29
Op, if dealer has the vin and the sales price and fees already, why not just prepay the whole transaction now (or by late august) ? Unless you are doing leasing in which there could be an issue??
07-29-2022, 10:08 AM
#30
Three Wheelin'
I don’t think they are targeting car “enthusiasts”. A 70 year old guy driving an S Class will pay the same tax. As to boats, it’s not to hard today to pay over $250,000 for a quality 24’ bow rider. My Cobalt lists north of that and with supply constraints, no discounts. Quite a few loaded pick up trucks above $100,000 these days too. Rivian with a large battery and some equipment over $114,000CAD.
The boat+pick-up equation added up to the value of a TT-S for comparison. One pays added taxes, the other does not.