More on luxury tax

[1st Vette]

I am hoping that one of the forum members who are real lawyers could chime in on the proper interpretation of the wording of the following which I copied from the GOC website. My take is that anything added over and above the original purchase price that comes to LESS than $5,000 wouldn’t be subject to the tax grab. Such as PPF , Ceramic, etc if dealer installed for example. From what I understand if improvement/additions are made up to a year after purchase then the tax is supposed to be paid although I can’t see someone adding a new exhaust six months later and running home to cut the government a check as the government would have no way of knowing this had been done.
Notice the “ at least $5,000 “ . I think a lot of dealers have been charging for amounts under $5,000 but over and above the $100,000 threshold where the tax kicks in.

​

Having improvements made to subject vehicles​

The luxury tax could apply when improvements are made to subject vehicles, as set out in sections 29 to 32. According to subsection 8(1), an improvement to a subject vehicle is the provision of either:

• tangible personal property that is installed in/on or affixed to the subject vehicle
• a service that modifies the subject vehicle and is physically performed on the subject vehicle

Improvements made to subject vehicles include car modifications. Examples of improvements made to a subject vehicle include stereo system installations, body kit installations, engine upgrades, vehicle wrap installations and window tinting services.
The luxury tax on improvements will typically only apply to improvements made to subject vehicles that were already subject to the luxury tax. However, in the event that improvements are made in connection with the sale of a subject vehicle, the calculation of the luxury tax payable on the sale of the subject vehicle would take into account the cost of the improvements.
The luxury tax on improvements will apply to improvements that total at least $5,000 made during the improvement period of the subject vehicle as determined under paragraphs 29(1)(a) and 30(1)(a). The luxury tax on improvements will be payable on the day following the improvement period.
If a sale triggered the luxury tax on a subject vehicle, the purchaser would be liable for any luxury tax payable on after-sales improvements made to that subject vehicle. Otherwise, the person that was liable for the luxury tax on a subject vehicle would be liable for any luxury tax payable on improvements made to that subject vehicle.

Example​

On September 22, 2022, a registered vendor sells a subject vehicle priced over $100,000 to a purchaser. The luxury tax applies to the subject vehicle at the time the sale is completed.
During the improvement period between September 22, 2022, and September 22, 2023, the purchaser hires three service providers to install the following improvements on the subject vehicle: performance tires, an infotainment system and an upgraded exhaust system. The total price of the improvements is $5,000.
The purchaser is liable for the luxury tax on improvements made to the subject vehicle. The luxury tax will be payable on September 23,

 

[C SEVEN GS Bob]

I paid a luxury tax component on a purchase a few months ago but don't really understand how it was calculated. Vehicle price was over $100,000 then there were several other fees plus PPF and ceramic coating. Lux tax was almost $4,000

 

[redpearl99]

I hate tax statutes. They are the most convoluted. The way I read it, the "improvement" provisions apply only to improvements made after the sale that originally triggered the luxury tax.

If you ask your dealership to add some modifications during PDI then the price of those mods will be included in the sales agreement. The luxury tax is payable on the total price in the agreement and not just the MSRP. The dealership is also liable for paying that tax to the government.

As stated, "in the event that improvements are made in connection with the sale of a subject vehicle, the calculation of the luxury tax payable on the sale of the subject vehicle would take into account the cost of the improvements."

These provisions are saying that tax will also "apply to improvements that total at least $5,000 made during the improvement period of the subject vehicle as determined under paragraphs 29(1)(a) and 30(1)(a)." If you look at the statute, it defines the "improvement period" as lasting from one year after the initial sales agreement.

So if you want to try and get around this you could ask your dealer to sell you the car without the upgrades. Then you go back and ask the dealership to do the extra work and bill you separately. I suspect most dealers will say no. If they say yes then you are still liable for the additional luxury tax on the improvements. If you don't pay then you are a tax cheat.

 

[Vettenut]

I am hoping that one of the forum members who are real lawyers could chime in on the proper interpretation of the wording of the following which I copied from the GOC website. My take is that anything added over and above the original purchase price that comes to LESS than $5,000 wouldn’t be subject to the tax grab. Such as PPF , Ceramic, etc if dealer installed for example. From what I understand if improvement/additions are made up to a year after purchase then the tax is supposed to be paid although I can’t see someone adding a new exhaust six months later and running home to cut the government a check as the government would have no way of knowing this had been done.
Notice the “ at least $5,000 “ . I think a lot of dealers have been charging for amounts under $5,000 but over and above the $100,000 threshold where the tax kicks in.

​

Having improvements made to subject vehicles​

The luxury tax could apply when improvements are made to subject vehicles, as set out in sections 29 to 32. According to subsection 8(1), an improvement to a subject vehicle is the provision of either:

• tangible personal property that is installed in/on or affixed to the subject vehicle
• a service that modifies the subject vehicle and is physically performed on the subject vehicle

Improvements made to subject vehicles include car modifications. Examples of improvements made to a subject vehicle include stereo system installations, body kit installations, engine upgrades, vehicle wrap installations and window tinting services.
The luxury tax on improvements will typically only apply to improvements made to subject vehicles that were already subject to the luxury tax. However, in the event that improvements are made in connection with the sale of a subject vehicle, the calculation of the luxury tax payable on the sale of the subject vehicle would take into account the cost of the improvements.
The luxury tax on improvements will apply to improvements that total at least $5,000 made during the improvement period of the subject vehicle as determined under paragraphs 29(1)(a) and 30(1)(a). The luxury tax on improvements will be payable on the day following the improvement period.
If a sale triggered the luxury tax on a subject vehicle, the purchaser would be liable for any luxury tax payable on after-sales improvements made to that subject vehicle. Otherwise, the person that was liable for the luxury tax on a subject vehicle would be liable for any luxury tax payable on improvements made to that subject vehicle.

Example​

On September 22, 2022, a registered vendor sells a subject vehicle priced over $100,000 to a purchaser. The luxury tax applies to the subject vehicle at the time the sale is completed.
During the improvement period between September 22, 2022, and September 22, 2023, the purchaser hires three service providers to install the following improvements on the subject vehicle: performance tires, an infotainment system and an upgraded exhaust system. The total price of the improvements is $5,000.
The purchaser is liable for the luxury tax on improvements made to the subject vehicle. The luxury tax will be payable on September 23,

Cant add much to this buddy

I try to keep my car purchases under 100 k .... I'd rather drive a Hyundai than give G-Man a penny more than I have to ... ( well ok mabe thats a stretch )

 

[1st Vette]

I hate tax statutes. They are the most convoluted. The way I read it, the "improvement" provisions apply only to improvements made after the sale that originally triggered the luxury tax.

If you ask your dealership to add some modifications during PDI then the price of those mods will be included in the sales agreement. The luxury tax is payable on the total price in the agreement and not just the MSRP. The dealership is also liable for paying that tax to the government.

As stated, "in the event that improvements are made in connection with the sale of a subject vehicle, the calculation of the luxury tax payable on the sale of the subject vehicle would take into account the cost of the improvements."

These provisions are saying that tax will also "apply to improvements that total at least $5,000 made during the improvement period of the subject vehicle as determined under paragraphs 29(1)(a) and 30(1)(a)." If you look at the statute, it defines the "improvement period" as lasting from one year after the initial sales agreement.

So if you want to try and get around this you could ask your dealer to sell you the car without the upgrades. Then you go back and ask the dealership to do the extra work and bill you separately. I suspect most dealers will say no. If they say yes then you are still liable for the additional luxury tax on the improvements. If you don't pay then you are a tax cheat.

If you don't like any of this then next time don't vote for Turd-eau

The line that has me curious is the one you have underlined and I originally inquired about. The part that says “ total at least $5,000 “ . Would that not imply that anything under $5,000 would not be subject to the tax ? If you would please explain what I am misunderstanding. Thanks for your time..

 

[redpearl99]

Correct. No tax on improvements if they do not total at least $5000

 

[1st Vette]

Correct. No tax on improvements if they do not total at least $5000

That was my guess. Hard to believe that it doesn’t apply to every penny over 100 K having witnessed this clown posse in action. Good to know. Thanks again.