Canada Luxury Tax Still Looms over Biz Aircraft

 - January 17, 2022, 11:46 AM

Per the Canadian government’s December 2021 economic and fiscal update, the proposed luxury tax on new general aviation aircraft sales did not go into force at the beginning of this month as previously expected. The country’s Department of Finance is still working to incorporate the results of its earlier consultation into the proposed tax framework. Draft legislation, including details on coming into force, is scheduled to be released early this year.

The tax would apply to new cars and aircraft with retail prices exceeding $100,000 and to boats priced above $250,000. The tax would be calculated at the lesser of 20 percent of the value above these thresholds or 10 percent of the full value of the luxury car, boat, or personal aircraft. The tax would apply to aircraft manufactured starting in 2019.

Over the last several months, the Canadian Business Aviation Association (CBAA) and the Canadian Operators and Pilots Association have sent letters to the federal government and testified in hearings expressing opposition to the tax. The two groups continue to push for changes to the proposed tax, including delaying enforcement until Jan. 1, 2023, and an increase of the price threshold for aircraft to $5 million. CBAA’s arguments against the tax are detailed in the association’s brief titled, “The Unintended Consequences of a Luxury Tax on Aircraft.”