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: XXXXXX
November 14, 2023
Dear [Client]:
Subject: Application of the luxury tax on the purchase of subject aircraft
Thank you for your letter dated [mm/dd/yyyy], concerning the application of the Select Luxury Items Tax Act (SLITA) as it pertains to the purchase of a subject aircraft.
STATEMENT OF FACTS
Based on your letter, the following is our understanding of the facts provided:
1. [Client] owns an aircraft (Aircraft A) which was registered prior to September 1, 2022 with the Government of Canada for the purposes of permitting the aircraft to fly within the jurisdiction of Canada.
2. [Client] has been in possession of Aircraft A since before September 1, 2022.
3. [Client] plans on purchasing another aircraft (Aircraft B). Consideration for the purchase of Aircraft B will be a combination of the trade-in value of Aircraft A and money.
4. Aircraft B was registered prior to September 1, 2022 with the Government of the United States of America for the purposes of permitting the aircraft to fly within the jurisdiction of USA.
5. Aircraft B has been in possession of a user since before September 1, 2022.
6. Both Aircraft A and B were manufactured after 2018.
7. Both Aircraft A and B meet the criteria of subject aircraft under paragraph 2(1)(a) of the SLITA.
INTERPRETATION REQUESTED
You would like the Canada Revenue Agency (CRA) to confirm whether the luxury tax applies on [Client]’s purchase or importation of Aircraft B.
DECISION
The luxury tax applies to the sale of subject aircraft priced above the $100,000 price threshold. Similarly, luxury tax applies to the importation of subject aircraft valued above the $100,000 price threshold.
Under the definition of subject aircraft, aircraft registered with a government before September 2022 and in possession of a user of the aircraft before September 2022 are excluded from the definition of subject aircraft.
Based on the facts set out above, Aircraft B does not meet the definition of subject aircraft and therefore can be either purchased or imported without the application of the luxury tax.
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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