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: 9000244
November 9, 2023
Dear [Client]:
Subject: Rebates on the export of subject vehicles
Thank you for your letter received [mm/dd/yyyy], concerning the application of the Select Luxury Items Tax Act (the Act) as it pertains to the export of subject vehicles. We apologize for the delay in our response.
STATEMENT OF FACTS
Based on your letter, the following is our understanding of the facts provided:
1. You represent a number of clients engaged in the business of exporting motor vehicles.
INTERPRETATION REQUESTED
You would like the Canada Revenue Agency (CRA) to confirm whether a motor vehicle exporter is entitled to apply for a rebate of the luxury tax payable on the purchase of a subject vehicle destined for export.
DECISION
The luxury tax applies to vehicles that meet the definition of “subject vehicle” under the Act and that are priced above the $100,000 price threshold. Based on the information that you have provided, we understand that the motor vehicle exporters purchase subject vehicles in Canada for export.
Under the Act, the vendor of a subject vehicle is generally the person who is liable for the luxury tax on the sale of a subject vehicle priced above the price threshold. Accordingly, any relief from the luxury tax is generally only available to the vendor who would have been liable for the luxury tax if the tax relief had not been available.
When a subject vehicle is sold to a purchaser by a vendor and the purchaser exports the subject vehicle, a rebate of the luxury tax is payable to the vendor if:
* the vendor is a registered vendor in respect of subject vehicles;
* the purchaser is not a registered vendor in respect of subject vehicles;
* the luxury tax on the sale of the subject vehicle was payable and reported by the vendor;
* the subject vehicle was not used in Canada before being exported;
* the subject vehicle was not registered with the Government of Canada or a province before being exported;
* the purchaser exports the subject vehicle as soon after the sale is completed; and,
* the purchaser provides to the vendor, and the vendor retains, evidence satisfactory of the exportation of the subject vehicle by the purchaser.
A registered vendor has two years in which to apply for the rebate on export, and must do so on form B500, Luxury Tax and Information Return for Registrants.
Registration requirement
A vendor is required to be registered as a vendor of subject vehicles if the vendor makes a qualifying sale or qualifying importation of a subject vehicle in the course of a business of offering for sale in Canada subject vehicles that have never been registered with the Government of Canada or a province.
A qualifying sale is a sale of:
* a subject vehicle to a purchaser;
* the subject vehicle has never been registered with the Government of Canada or a province; and,
* the subject vehicle is sold for an amount that exceeds the price threshold of $100,000.
A qualifying importation is an importation of:
* a subject vehicle by a person;
* the subject vehicle has never been registered with the Government of Canada or a province; and,
* the value of the subject vehicle at the time of importation exceeds the price threshold of $100,000.
As a registrant
If a person makes qualifying sales or qualifying importations of subject vehicles in the course of a business of offering subject vehicles for sale in Canada, they are required to be registered as a vendor in respect of subject vehicles under the Act. As a registrant, purchases of subject vehicles from other registered vendors can be made without the tax applying at the time of sale by providing a completed form L100-1 Luxury Tax Exemption Certificate for Subject Vehicles.
Registered vendors are liable for the luxury tax payable on sales of subject vehicles in Canada. The tax must be reported on form B500 Luxury Tax and Information Return for Registrants.
If a purchaser, that is not a registered vendor in respect of subject vehicles for the purposes of the luxury tax, exports a subject vehicle purchased from a registered vendor of subject vehicles and provides satisfactory evidence of the export of the subject vehicle to the registered vendor, the registered vendor would be eligible to claim a refund of the luxury tax payable as a rebate to net tax on form B500 Luxury Tax and Information Return for Registrants.
As a non-registrant
If a person does not make qualifying sales or qualifying importations of subject vehicles in the course of a business of offering subject vehicles for sale in Canada, they are not required nor permitted to be registered as a vendor in respect of subject vehicles under the Act. As a non-registrant, luxury tax will apply on purchases of subject vehicles. The vendors from which the non-registrant purchases subject vehicles will be liable for the luxury tax payable on sales of subject vehicles in Canada, not the non-registrant purchaser.
If a purchaser, that is not a registered vendor in respect of subject vehicles for the purposes of the luxury tax, exports the newly purchased subject vehicle, purchased from a registered vendor of subject vehicles, and provides satisfactory evidence of the export of the subject vehicle to the registered vendor, the registered vendor would be eligible to claim a rebate for the luxury tax payable, not the purchaser. The registered vendor may pass the savings of the luxury tax to the purchaser, by excluding an amount equal to the luxury tax from the purchase price of the subject vehicle.
As you are aware, the CRA is responsible for the administration of tax statutes including the Select Luxury Items Tax Act. Any questions concerning tax policy are beyond the scope of the CRA’s mandate of administering and enforcing tax legislation and should be directed towards the Department of Finance 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
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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