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 GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Client]
[Client Address]
Attention:
Case Number: XXXXXX
November 07, 2023
Dear [Client]:
Subject: LUXURY TAX INTERPRETATION
Application of the Luxury tax on the sale of a subject vehicle
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 sale of previously registered motor vehicles.
STATEMENT OF FACTS
Based on your letter, the following is our understanding of the facts provided:
1. [Client] is an authorized [XXX] retailer.
2. [Client] registered a number of motor vehicles on [mm/dd/yyyy].
3. The registered motor vehicles are intended to be used by [Client] for demonstration purposes and as courtesy loaners for customers.
INTERPRETATION REQUESTED
You would like the Canada Revenue Agency (CRA) to confirm whether the luxury tax will be payable when it comes time to sell the motor vehicles.
DECISION
The luxury tax applies to the sale of subject vehicles priced above the $100,000 price threshold and is payable at the time the sale is completed. In most cases, the vendor of the subject vehicle is liable for the luxury tax on the sale. A subject vehicle, however, does not include a motor vehicle that was registered with a government before September 2022 and in possession of a user of the motor vehicle before September 2022.
Based on the facts set out above, the demonstration and courtesy vehicles were registered with a government and in possession of [Client] before September 2022. The motor vehicles therefore do not meet the definition of a subject vehicle and luxury tax will not be payable on their eventual sale.
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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