Canada’s “Luxury Tax” implemented under the Select Luxury Items Tax Act (“SLITA”) has been a significant development for vendors, importers and buyers of high-priced vehicles, aircraft and vessels. As we have previously discussed here, the SLITA imposes tax obligations that require careful compliance, including registration and record keeping.
Recently, the CRA released a new guidance document clarifying how third-party rebates impact the calculation of tax owing under the SLITA. The main message is straightforward but significant – rebates from manufacturers or other third parties do not reduce the taxable value of luxury items and do not lower the amount of tax vendors and importers must pay!