New Canadian tax on boats

[Rossland]

Yesterdays Canadian budget announced a new "luxury" tax on boats valued at over $250,000 Cdn (about $188,000 US)

From the Toronto Star:
"The new tax will be calculated as 20 per cent of the value above the threshold or 10 per cent of the full value of the luxury car, boat, or personal aircraft, whichever is lower. The GST/HST would apply to the final sale price, inclusive of the proposed tax."

The GST/HST in Ontario is 13%.

 

[RT Firefly]

Greetings,
Mr. R. Taxes on taxes. Hmmmm....

 

[sunchaser]

The proposed luxury tax hits more than boats. Think Tesla, Mercedes and Cessna. I've one friend who owns a yacht brokerage in Canada, his feelings are obvious.

 

[John R M]

It's interesting to note that this tax applies to new yachts only, apparently not to resales.

From the budget document:

Boats
It is proposed that the tax apply to new boats such as yachts, recreational
motorboats and sailboats, typically suitable for personal use.

 

[twistedtree]

Is this proposed, or is it now law?

 

[John R M]

Just proposed yesterday. Needs to be debated and voted upon by both levels of government.

 

[koliver]

The above doesn't tell us very much, other than that this new tax is on new boats only, at the point of sale to a final purchaser, excluding "water scooters" and other small craft (how those would ever be above the $250k threshold is not explained), and no other details are given.
The budget document itself says about this
"Next Steps: Further details will be announced in the coming months. "

Will it drive up the resale prices of older, used, low value boats? I doubt it.

 

[SteveK]

I wonder if this is a tax on our new BC Ferries. I recall an unexpected federal tax on the last group of new boats.

 

[John R M]

The above doesn't tell us very much, other than that this new tax is on new boats only, at the point of sale to a final purchaser, excluding "water scooters" and other small craft (how those would ever be above the $250k threshold is not explained), and no other details are given.
The budget document itself says about this
"Next Steps: Further details will be announced in the coming months. "

Will it drive up the resale prices of older, used, low value boats? I doubt it.

Sorry my post didn't meet your expectations. It's not my job to explain everything to everybody. I was merely pointing out that the tax doesn't apply to used boats.

 

[koliver]

I wonder if this is a tax on our new BC Ferries. I recall an unexpected federal tax on the last group of new boats.

The language used in the budget suggests otherwise:

"it is proposed that the tax apply to new boats such as yachts, recreational
motorboats and sailboats, typically suitable for personal use."

 

[koliver]

Sorry my post didn't meet your expectations. It's not my job to explain everything to everybody. I was merely pointing out that the tax doesn't apply to used boats.

John, poor choice of words by me. "the above" was not directed at your posts, rather at the vague budget document itself.

I usually look to the source document for an explanation, but this time there is no explanation there.

 

[SteveK]

The tax is calculated at the lesser of:

20 per cent of the value above threshold ($100,000 for cars and personal aircraft; $250,000 for boats) ; or
10 per cent of the full value of the luxury car, boat or personal aircraft.

Aha, this explains why marine items under $250,000 are exempt.
EVRYTHING would be taxed at 10% on the full value, smokescreen.

 

[MurrayM]

Don't governments often send up trial balloons all the time that die even before they get tabled or see a first reading? (Pretty sure that's the start of the process for new laws and taxes, but nowhere near confident!)

It could be a way of 'testing the waters' for a more expansive plan some time in the future; the thought process being, "If we test this on boaters first we'll have an indication of how repulsive it is by how much noise they make or if they mount some sort of organized opposition. If energetic, we'll lay low for a decade or so, if flaccid, we'll drop it for now but start moving towards a broader tax scheme on many more luxury items".

 

[firehoser75]

With the huge amount of Government Covid related spending, tax increases (and apparently deficit spending) are to be expected. I guess the only thing we can hope is that they (increases) are well thought out and "fair"???

 

[MurrayM]

With the huge amount of Government Covid related spending, tax increases (and apparently deficit spending) are to be expected. I guess the only thing we can hope is that they (increases) are well thought out and "fair"???

My thoughts exactly.

A neighbour of mine doesn't have a 'real job' but gets jobs here & there under the table. He told me last week that he doesn't admit what he makes at tax time because he wants to avoid paying taxes.

My thought was, "Hmmm...didn't I deliver a bunch of Covid related federal government cheques to you before I retired as a letter carrier?"

Kept my mouth shut.

How much tax was payed before, how much of an increase is this new tax above that original tax, and what does that increase mean in dollars on a $250,000.00 boat?

The provinces and territories will be looking for more money for health care from the federal government...has to come from somewhere!

Fair and balanced will be a daunting task.

 

[SteveK]

If you do the math, boats that would have sold for $249,99 would pay 10% across the board or 24,999.

Boats that sell for say $250,900 will pay Tax of 20% on the $900 or $180.

A person can actually buy a $375,000 boat and pay the same tax as one sold for $249,999

The tax is calculated at the lesser of:

20 per cent of the value above threshold ($100,000 for cars and personal aircraft; $250,000 for boats) ; or
10 per cent of the full value of the luxury car, boat or personal aircraft.

 

[John R M]

If you do the math, boats that would have sold for $249,99 would pay 10% across the board or 24,999.

Boats that sell for say $250,900 will pay Tax of 20% on the $900 or $180.

A person can actually buy a $375,000 boat and pay the same tax as one sold for $249,999

1) Boats under $250K aren't subject to the tax.
2) As you quoted, the tax is calculated on the lesser of the 2 calculations. The $375K boat would be taxed $25K, the $250,900 boat would be taxed $180 as you said.

 

[Alaskan Sea-Duction]

Ok I have a solution. Let's get B.C. up and running. Then invite your neighbors from the south to buy Scotch and cigars while visiting!!! The taxes alone would pay for B.C. needs.....

 

[Lou_tribal]

My thoughts exactly.

A neighbour of mine doesn't have a 'real job' but gets jobs here & there under the table. He told me last week that he doesn't admit what he makes at tax time because he wants to avoid paying taxes.

My thought was, "Hmmm...didn't I deliver a bunch of Covid related federal government cheques to you before I retired as a letter carrier?"

Kept my mouth shut.

How much tax was payed before, how much of an increase is this new tax above that original tax, and what does that increase mean in dollars on a $250,000.00 boat?

The provinces and territories will be looking for more money for health care from the federal government...has to come from somewhere!

Fair and balanced will be a daunting task.

My neighbor own a paint shop. He recently was very proud to say he made more money since the beginning of the pandemic then ever as people spend their time doing reno. Then he was also very proud to say that he got the 0% loan from gov that he used for financial investment.
Jerks are jerks, having a job or not, a lot of people are using the system just because they can.
This said, I would be happy to pay taxes if I could afford a 250k$+ car

L

 

[Jeff F]

This said, I would be happy to pay taxes if I could afford a 250k$+ car

L

The threshold for cars and recreational planes is $100k.

 

[MurrayM]

The threshold for cars and recreational planes is $100k.

So, is this a tax on the whole amount, or just on the amount above a certain level and the amount below that is taxed as normal, like with income taxes?

 

[koliver]

So, is this a tax on the whole amount, or just on the amount above a certain level and the amount below that is taxed as normal, like with income taxes?

Not to worry Murray.

This proposed new tax will be on the excess over $250k Cdn. On new. Won't bother me or you.

 

[BruceK]

Our Federal Opposition Party campaigned "promising" a tax on boats last election. They remain the Opposition.
We have a "luxury car tax" to protect locally built cars from competition of overseas built cars. We build no cars locally anymore,we still have the tax.

 

[MurrayM]

Not to worry Murray.

This proposed new tax will be on the excess over $250k Cdn. On new. Won't bother me or you.

Yup, no worries here Mate!

Just trying to understand how it's going to be applied.

 

[Slider70]

Greetings,
Mr. R. Taxes on taxes. Hmmmm....

Welcome to being Canadian. We seem to love paying taxes on taxes as we have lots of them!

 

[Slider70]

Welcome to being Canadian. We seem to love paying taxes on taxes as we have lots of them!

Just understand, what doesn't bother you today will come back and bite you in the ass later. This Government and others around the world are going to need major tax increased to nibble away at the MAJOR debt they have created to cover the gigantic spending over the virus and favorite ideas to get re-elected.

Our present Canadian Government is the worst at this in our history even before the virus showed its ugly head. Our carbon tax is a fine example of growing taxes on taxes, expanding yearly.

 

[BrentwoodBayliner]

The proposed tax would apply ONLY to NEW boats valued at OVER $250,000. For values below that, no extra 'luxury' tax is payable.

It would also apply to aircraft, cars and most other 4-wheeled vehicles, except buses, farm equip, etc.

Interestingly (and glaringly!) it would NOT apply to new RV's! Apparently the RV dealers have a better lobby group than the boat dealers.

 

[Nikko]

Since my boat is my cottage, and I'm going to be expected to pay this new tax as my cottage has now been deemed a "luxury", does that mean there should be a "luxury" tax on all other cottages in the rest of Canada as well? Or will the geographic discrimination simply continue..??

 

[SteveK]

The proposed tax would apply ONLY to NEW boats valued at OVER $250,000. For values below that, no extra 'luxury' tax is payable.

It would also apply to aircraft, cars and most other 4-wheeled vehicles, except buses, farm equip, etc.

Interestingly (and glaringly!) it would NOT apply to new RV's! Apparently the RV dealers have a better lobby group than the boat dealers.

Do you recall the luxury tax for home sales was only to apply for new, and over a certain amount. How is that working out today? First you get a foot in the door, then..........

Home buyers in BC pay a provincial Property Transfer Tax (PTT) when they buy a home. The tax is charged at a rate of 1% on the first $200,000 of the purchase price and 2% on the remainder up to and including $2 million. The PTT is 3% on amounts greater than $2 million.

 

[SteveK]

Since my boat is my cottage, and I'm going to be expected to pay this new tax as my cottage has now been deemed a "luxury", does that mean there should be a "luxury" tax on all other cottages in the rest of Canada as well? Or will the geographic discrimination simply continue..??

Actually, since you declared it as a cottage, you can now start paying the empty home tax too.