Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada
Excise and Specialty Tax Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Client]
[Address]
Case Number: 9000387
September 11, 2025
Dear [Client]:
Subject: LUXURY TAX RULING
Luxury tax payable on the sale of aircraft
Thank you for your letter dated [mm/dd/yyyy], concerning the application of the luxury tax on the sale of aircraft. We apologize for the delay in our response.
All legislative references are to the Select Luxury Items Tax Act (SLITA) unless otherwise specified.
Statement of Facts
From the documents and explanations that you have provided, we understand the following:
1. You are representing two hobbyists (vendors) who recently built separate aircraft.
2. The aircraft were built from aircraft parts and kits mostly manufactured in the USA.
3. Both aircraft were registered with Transport Canada in 2024.
4. Neither aircraft have been used in Canada.
5. Neither vendor is registered as a vendor for purposes of the luxury tax.
6. Both vendors are intending on selling their respective aircraft. One vendor is asking $[…] and the other vendor is asking $[…].
7. One of the vendors is in the process of selling their aircraft to a purchaser located in [location]. The aircraft will be delivered to the purchaser in the [location] at the close of the deal.
Interpretation Requested
You would like the Canada Revenue Agency (CRA) to confirm whether the luxury tax applies on the sale of aircraft in Canada and on the sale and export of an aircraft. You would also like to confirm whether the vendors may be registered as registered vendors under the Act.
Decision
The luxury tax applies to aircraft that meet the definition of “subject aircraft” under the Act and that are priced or valued above the $100,000 price threshold. Under the Act, the vendor of the subject aircraft is typically the person who is liable for the luxury tax on the sale of a subject aircraft priced or valued above the price threshold.
Based on the information that you have provided, we understand that both aircraft in question meet the definition of subject aircraft.
Sale of Subject Aircraft in Canada
Luxury tax will be payable by the vendor on the sale of a subject aircraft if the sale is made in Canada and the taxable amount exceeds the price threshold. A non-registered vendor will have to report the luxury tax payable on form B-501 Luxury Tax and Information Return for Non-Registrants. The vendor will also be required to send to the Minister of National Revenue an application for a tax certificate in respect of the subject aircraft. A tax certificate may be applied for in Part E of form B-501 by checking the tax certificate application checkbox. Alternatively, a tax certificate may be applied for separately by filing form L-501 Tax Certificate Application.
Sale and export of Subject Aircraft
Luxury tax will not be payable by the vendor on the sale of a subject aircraft if the vendor exports the subject aircraft directly to the purchaser without the subject aircraft being delivered or made available in Canada as part of the sale. Based on the facts provided, luxury tax would not be payable on the sale and export of the subject aircraft to the purchaser located in [location] since the subject aircraft would be delivered directly to the purchaser outside of Canada.
Requirement for Registration
Certain persons are required to register with the Canada Revenue Agency (CRA) as registered vendors under the Act. Such persons include manufacturers, wholesalers, retailers and importers of vehicles, aircraft or vessels that are within the scope of the tax regime and that are priced above the relevant price thresholds.
A person is required to register as a registered vendor of subject aircraft if, in the course of a business of selling subject aircraft in Canada, the person either sells or imports subject aircraft with a value over $100,000 that has never been registered with the Government of Canada.
Based on the facts provided, the vendor are not required, nor permitted, to be registered under the Act since neither are selling their respective aircraft in the course of a business of selling subject aircraft in Canada.
I trust the above is satisfactory. If you have any questions or concerns, please contact me at 343-572-4194.
Yours truly,
Alfonso Capretta
Manager
Luxury Tax Unit
Excise Tax and Fuel Charge Division
Excise and Specialty Tax Directorate
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