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 XX, 2023
Dear [Client]:
Subject: Application of the Luxury tax on the sale of a subject vessel
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 a vessel.
STATEMENT OF FACTS
Based on your letter, the following is our understanding of the facts provided:
1. The Company is a boat wholesaler.
2. The Company imports and resells yachts to Canadians.
3. The Company is registered for the Luxury Tax effective September 1, 2022.
4. The Company imported a vessel into Canada on [mm/dd/yyyy].
5. The price of the vessel exceeded the Luxury Tax threshold of $250,000.
6. The Company insured the vessel.
7. The vessel was registered with Transport Canada in the Company’s name and issued a Pleasure Craft License on [mm/dd/yyyy].
8. At the time of import, there was no customer identified to purchase the vessel.
9. The vessel was used by the Company as a demonstration vessel to be able to show to potential customers. The vessel was always available for purchase.
10. The vessel’s year of manufacture is [mm/yyyy].
INTERPRETATION REQUESTED
You would like the Canada Revenue Agency (CRA) to confirm whether the vessel is a subject vessel as defined under the Select Luxury Items Tax Act.
DECISION
The luxury tax applies to the sale of subject vessels priced above the $250,000 price threshold and is payable at the time the sale is completed. In most cases, the vendor of the subject vessel is liable for the luxury tax on the sale.
A subject vessel is a vessel that is designed or adapted for leisure, recreation or sport activities, and has a date of manufacture after 2018, but does not include a vessel that is registered with a government before September 2022 and is in possession of a user of the vessel before September 2022.
Based on the facts provided, the vessel is not a subject vessel because:
* the Company had the vessel registered and licenced as a pleasure craft with Transport Canada on [mm/dd/yyyy]; and,
* the vessel was in possession of and being used by the Company before September 2022.
The luxury tax on the resale of the vessel will not apply as the vessel is not a subject vessel.
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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