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Corvette
C8 Forum
2024 Ordering Strategy to save on both taxes
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<blockquote data-quote="ScottyR" data-source="post: 314484" data-attributes="member: 8843"><p>If you buy the parts from the same dealer you bought the car from, the Luxury Tax is supposed to be charged on those as well. I dont know how they are ever going to enforce that part of the law though? </p><p></p><h2>Calculation of the luxury tax on improvements</h2><p>The luxury tax on improvements made to subject vehicles is calculated in accordance with section 35. For improvements, the luxury tax is the difference between the following:</p><ul> <li data-xf-list-type="ul">the amount determined under section 34 using the <strong>total taxable amount</strong>, which is the taxable amount that would have been used to calculate the luxury tax on the subject vehicle if the value of consideration for the improvements had been initially included at the time the luxury tax on the subject vehicle was triggered</li> <li data-xf-list-type="ul">the amount determined under section 34 using the <strong>unimproved taxable amount</strong>, which is equal to the taxable amount of the subject vehicle</li> </ul><p>Therefore, the luxury tax on improvements made to subject vehicles is calculated using the following formula:</p><p>A – B</p><table style='width: 100%'><tr><th>Where</th><td> </td></tr><tr><th>A</th><td>is the lesser of:<br /> <ul> <li data-xf-list-type="ul">the total taxable amount multiplied by 10%</li> <li data-xf-list-type="ul">the amount that results from subtracting $100,000 from the total taxable amount and multiplying the difference by 20%</li> </ul> </td></tr><tr><th>B</th><td>is the lesser of:<br /> <ul> <li data-xf-list-type="ul">the unimproved taxable amount multiplied by 10%</li> <li data-xf-list-type="ul">the amount that results from subtracting $100,000 from the unimproved taxable amount and multiplying the difference by 20%</li> </ul> </td></tr></table><h3>Example – Luxury tax on improvements made to a subject vehicle</h3><p>A registered vendor sells a subject vehicle to a purchaser for a consideration of $140,000. No improvements are made at that time. The taxable amount of the subject vehicle is $140,000, and luxury tax of $8,000 is paid on the sale of the subject vehicle. The unimproved taxable amount is $140,000.</p><p>During the improvement period, the purchaser hires a service provider to install the following improvements for the following consideration: a stereo system upgrade for $2,000, vehicle wrap for $3,500 and a remote starter system for $500. The total consideration for the improvements is $6,000. The total taxable amount is $146,000.</p><p>The luxury tax on the improvements is calculated using the formula <strong>A − B</strong> where:</p><p><strong>A</strong> is the lesser of:</p><ul> <li data-xf-list-type="ul">$14,600 ($146,000 × 10%)</li> <li data-xf-list-type="ul">$9,200 [($146,000 − $100,000) × 20%]</li> </ul><p><strong>B </strong>is the lesser of:</p><ul> <li data-xf-list-type="ul">$14,000 ($140,000 × 10%)</li> <li data-xf-list-type="ul">$8,000 [($140,000 − $100,000) × 20%]</li> </ul><p>The luxury tax payable on the improvements is $1,200 ($9,200 − $8,000).</p></blockquote><p></p>
[QUOTE="ScottyR, post: 314484, member: 8843"] If you buy the parts from the same dealer you bought the car from, the Luxury Tax is supposed to be charged on those as well. I dont know how they are ever going to enforce that part of the law though? [HEADING=1]Calculation of the luxury tax on improvements[/HEADING] The luxury tax on improvements made to subject vehicles is calculated in accordance with section 35. For improvements, the luxury tax is the difference between the following: [LIST] [*]the amount determined under section 34 using the [B]total taxable amount[/B], which is the taxable amount that would have been used to calculate the luxury tax on the subject vehicle if the value of consideration for the improvements had been initially included at the time the luxury tax on the subject vehicle was triggered [*]the amount determined under section 34 using the [B]unimproved taxable amount[/B], which is equal to the taxable amount[B] [/B]of the subject vehicle [/LIST] Therefore, the luxury tax on improvements made to subject vehicles is calculated using the following formula: A – B [TABLE] [TR] [TH]Where[/TH] [TD] [/TD] [/TR] [TR] [TH]A[/TH] [TD]is the lesser of: [LIST] [*]the total taxable amount multiplied by 10% [*]the amount that results from subtracting $100,000 from the total taxable amount and multiplying the difference by 20% [/LIST][/TD] [/TR] [TR] [TH]B[/TH] [TD]is the lesser of: [LIST] [*]the unimproved taxable amount multiplied by 10% [*]the amount that results from subtracting $100,000 from the unimproved taxable amount and multiplying the difference by 20% [/LIST][/TD] [/TR] [/TABLE] [HEADING=2]Example – Luxury tax on improvements made to a subject vehicle[/HEADING] A registered vendor sells a subject vehicle to a purchaser for a consideration of $140,000. No improvements are made at that time. The taxable amount of the subject vehicle is $140,000, and luxury tax of $8,000 is paid on the sale of the subject vehicle. The unimproved taxable amount is $140,000. During the improvement period, the purchaser hires a service provider to install the following improvements for the following consideration: a stereo system upgrade for $2,000, vehicle wrap for $3,500 and a remote starter system for $500. The total consideration for the improvements is $6,000. The total taxable amount is $146,000. The luxury tax on the improvements is calculated using the formula [B]A − B[/B] where: [B]A[/B] is the lesser of: [LIST] [*]$14,600 ($146,000 × 10%) [*]$9,200 [($146,000 − $100,000) × 20%] [/LIST] [B]B [/B]is the lesser of: [LIST] [*]$14,000 ($140,000 × 10%) [*]$8,000 [($140,000 − $100,000) × 20%] [/LIST] The luxury tax payable on the improvements is $1,200 ($9,200 − $8,000). [/QUOTE]
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C8 Forum
2024 Ordering Strategy to save on both taxes
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