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]
[Client Address]
Attention: [Client]
Case Number: ######
July 18, 2023
Dear [Client]:
Subject: Application of the luxury tax to resale of subject aircraft
Thank you for your letter dated [mm/dd/yyyy], concerning the application of the Select Luxury Items Tax Act (the Act) as it pertains to the resale of a subject aircraft.
STATEMENT OF FACTS
Based on your letter, the following is our understanding of the facts provided:
1. [The Company] entered into a written agreement in [yyyy] with an aircraft manufacturer for the purchase of an aircraft, which will be delivered in Québec in [yyyy].
2. The purchased aircraft will have all the characteristics of a subject aircraft (as defined under the Act).
3. The luxury tax will not be reported or paid by the vendor of the subject aircraft.
4. [The Company] paid a deposit upon the signature of the purchase agreement.
5. [The Company] is not registered under the Act.
6. [The Company] will take possession of the aircraft in [yyyy] and make final payment.
INTERPRETATION REQUESTED
You would like the Canada Revenue Agency (CRA) to confirm whether the luxury tax applies on the sale of the subject aircraft by [the Company] to a person that cannot provide an exemption certificate.
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 the aircraft in question meets the definition of subject aircraft, and will be acquired without the application of the luxury tax.
Since the luxury tax will not be payable on the sale of the subject aircraft, an application for a tax certificate will not be required. A tax certificate is a certificate issued by the CRA for a subject aircraft that indicates that the luxury tax has already been paid or became payable for that subject aircraft.
In absence of a tax certificate, if [the Company] sells the subject aircraft and the taxable amount exceeds the price threshold, luxury tax will be payable by [the Company] at the time the sale is completed provided an exemption certificate does not apply. [the Company] will have to report the luxury tax payable on form B-501 Luxury Tax and Information Return for Non-Registrants. [the Company] 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.
For more information on the application of the luxury tax on aircraft, please refer to our notice LTN4 Subject Aircraft Under the Select Luxury Items Tax Act (https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ltn4.html).
I trust the above is satisfactory. If you have any questions or concerns, please contact me at 343-572-4194.
Yours truly,
Alfonso Capretta
Acting Manager
Luxury Tax Unit
Excise Tax and Fuel Charge Division
Excise and Specialty Tax Directorate
Legislative Policy and Regulatory Affairs Branch
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