Canada to introduce luxury boat tax

The new tax, which will also apply to cars and aircraft costing more than $CAN100,000, will add a minimum of an extra $CAN25,000 to the price of a new boat. However, the tax will not apply to second-hand boats.

“It is proposed that the tax apply to new boats such as yachts, recreational motorboats and sailboats, typically suitable for personal use,” the briefing notes that accompany the Budget say.

“Smaller personal watercraft (eg., water scooters) would be excluded from the base,” it says.

“For greater certainty, floating homes, commercial fishing vessels, ferries, and cruise ships would fall outside the scope of the tax.”

According to the document, the amount of the tax for boats costing more than $CAN250,000 would be the lesser of 10 per cent of the full value of the boat or 20 per cent of the value above $CAN250,000.

The new tax, which will be collected at the final point of sale, is earmarked for an introduction on January 1, 2022. No tax will be charged on boats exported from Canada.

The Justin Trudeau-led government did not present a budget in 2020 in response to the COVID-19 pandemic and its effect on the economy, and instead released a number of stimulus packages to keep the Canadian economy buoyant.

However, the moves have plunged the country into deficit, with other budget measures such as a $CAN30 billion childcare initiative eating further into the public purse.

Canada has also introduced a tax on the delivery of digital services, quickly dubbed the Netflix tax, and a big hike on the price of cigarettes.