New Federal Luxury Tax

[scraze66]

Does anyone know how this new tax works? If a car is $98,000, do I pay the 10%? Some websites are saying I need to get the final figure after all taxes so in this case it would be $102,900 (98000 x 1.05) and I obviously would fall under this new rule.

Or am I exempt if the price before taxes is under $100,000?

 

[harshadt]

If your car costs less than 100K before taxes but after all options then no luxury tax.
If over 100K then the lower of either 10% of the entire price, or 20% of the amount over 100K
Example: 98K= no luxury tax
120K then 4K in luxury tax (20,000 x .2) (other option is 120,000x .1= 12,000)
200K then 20K luxury tax (200,000x .10 or 100,000 x .20)
250K then 25K in luxury tax (250,000 x .10) (other option is 150,000 x .20= 30,000)
So, between 100-199K, then 20% luxury tax of amount over 100K applies
Over 200K the 10% of total amount applies
Hope this was clear. Also, the trade in value does not apply ie. if you have a 50K trade in, and your new car costs 150K, then you pay luxury tax on the 150K, and sales tax (hst or gst) on the 100K (150K minus trade in 50K) + luxury tax amount (10K), so hst is on 110K

 

[Murray20c8]

Now asked and answered as it was in another thread. If not clear please ask your question, but please let's not make it a political one.

 

[scraze66]

If your car costs less than 100K before taxes but after all options then no luxury tax.
If over 100K then the lower of either 10% of the entire price, or 20% of the amount over 100K
Example: 98K= no luxury tax
120K then 4K in luxury tax (20,000 x .2) (other option is 120,000x .1= 12,000)
200K then 20K luxury tax (200,000x .10 or 100,000 x .20)
250K then 25K in luxury tax (250,000 x .10) (other option is 150,000 x .20= 30,000)
So, between 100-199K, then 20% luxury tax of amount over 100K applies
Over 200K the 10% of total amount applies
Hope this was clear. Also, the trade in value does not apply ie. if you have a 50K trade in, and your new car costs 150K, then you pay luxury tax on the 150K, and sales tax (hst or gst) on the 100K (150K minus trade in 50K) + luxury tax amount (10K), so hst is on 110K

Thank you for this explanation! My 2LT build is coming out to $97k. A 3LT with the same options is $103k. No brainer to get the 3LT then.

 

[Mach147]

I had to ditch a couple of options on my order to minimize the extra tax. I still came in at $100,495 so I will pay around another $100 in additional taxes. I found myself dropping some nice-to-have options, as adding an extra 20% to their cost (once you are at $100k already) made them not worth it for me.

 

[Dockroger]

My understanding is that if the order pre dates 2022 it’s exempt

 

[Cariboocreek]

My understanding is that if the order pre dates 2022 it’s exempt

I do not believe an order is a sales agreement. There is no bill of sale or agreement to purchase on a simple order as a result luxury tax will likely be imposed.

 

[theboss]

I wonder if you order a 100k vehicule + 5k options but invoice is under 100k because some rebate, would I be charge the luxury tax on 105k value before rebate or on the invoice price with just the 2 already prohibitive regular taxes

 

[Cariboocreek]

I wonder if you order a 100k vehicule + 5k options but invoice is under 100k because some rebate, would I be charge the luxury tax on 105k value before rebate or on the invoice price with just the 2 already prohibitive regular taxes

You will be charged the luxury tax on the sale amount in excess of $100k. If the invoice is under $100k then no luxury tax. Over, then it is 20% of the amount exceeding $100k.

 

[theboss]

You will be charged the luxury tax on the sale amount in excess of $100k. If the invoice is under $100k then no luxury tax. Over, then it is 20% of the amount exceeding $100k.

Thanks for the info. I guess some people would like to pay cash the 3 or 4k over the 100k mark to save that luxury tax

 

[gone]

Aside from axing options to reduce the total cost and avoid the 20% luxury tax on those options, don’t forget to NOT purchase any accessories such as mud flaps, floor mats, frunk/trunk tray set, and even the CTEK OEM battery tender. All those can be purchased later and often for less than MSRP from a GM OEM wholesaler, saving not only money off MSRP but also the 20% tax. Or consider aftermarket for accessories and things like rims. Do your homework and decide what you REALLY need and can get elsewhere for less.

 

[Cariboocreek]

Thanks for the info. I guess some people would like to pay cash the 3 or 4k over the 100k mark to save that luxury tax

Paying cash won’t save the tax unless you mean not having certain items included in the deal and purchased either oem or aftermarket later.

 

[ggurface]

If we signed the purchase order and paid deposit before start of 2022 are we exempt from this?

 

[SONSH1NE]

If we signed the purchase order and paid deposit before start of 2022 are we exempt from this?

My Salesman was adamant and checked in with the Taxman to make sure that I didn't have to pay the luxury tax since we signed the purchase agreement in October of 21. You need to educate your dealer if you are in the same boat. So glad I went with Scherer Chevrolet. Saved me $3200.

 

[ggurface]

My Salesman was adamant and checked in with the Taxman to make sure that I didn't have to pay the luxury tax since we signed the purchase agreement in October of 21. You need to educate your dealer if you are in the same boat. So glad I went with Scherer Chevrolet. Saved me $3200.

Thanks! I am seeing it straight from the CRA website too.

My salesman didnt know about this so I guess WN was charging all customers for this.

The luxury tax will not apply to the sale of a subject vehicle priced above the price threshold where a purchaser and a vendor have entered into a written agreement for the sale of the subject vehicle before 2022 in the course of the vendor’s business of selling subject vehicles.

Subject Vehicles Under the Select Luxury Items Tax Act - Canada.ca

www.canada.ca

 

[Ka-Chow]

I do not believe an order is a sales agreement. There is no bill of sale or agreement to purchase on a simple order as a result luxury tax will likely be imposed.

I can confirm this is the case

 

[ggurface]

I can confirm this is the case

I have a yellow Vehicle Purchase Agreement form with my details and date, and everything. What are my chances?

 

[Ka-Chow]

I have a yellow Vehicle Purchase Agreement form with my details and date, and everything. What are my chances?

what is the date on the yellow copy of purchase agreement (because basically this is carbon copy of actual vpa)Did the vehicle get ordered? Unusual for dealership to give if allocation not confirmed.

 

[ggurface]

what is the date on the yellow copy of purchase agreement (because basically this is carbon copy of actual vpa)Did the vehicle get ordered? Unusual for dealership to give if allocation not confirmed.

Its Oct 2021 (which is when I placed my deposit). I think we lucked out because this is a very official looking purchase agreement, with the vehicle model, owner name, address, etc. Just no actual options, or price. So is this going to be a gray area?

 

[Ka-Chow]

I don’t want to burst your bubble but I don’t think there will be a grey area. The law is quite specific with examples and everything. Unless the dealership is going to do some “creative” accounting, you will be paying the luxury tax because they will be.