Supercars will be more expensive as Canada made a new tax bill in effect. All new vehicles made after 2018 that cost over $100,000 will be taxed. The new luxury tax law went into effect on September 1. The Canadian luxury tax law also applies to aircraft, boats with under 40 seats, and those which costcountry more than $250,000.
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Vehicles such as commercial vehicles and motorhomes RV vans that weighs under 8,501 pounds don’t come under it. Recreational vehicles such as ATVs, snowmobiles, and motorcycles are also not a part of the new tax law. Canada’s luxury tax law will charge carmakers who import or sell their vehicles which boils down to the customers at last.
The new tax law uses two methods to calculate how much of the increased price you’ll pay for your next pensive supercar. The fee is either 10 percent of the total price or 20 percent of the difference between the price and the $100k mark. The lowest of the two will be in use for the vehicles that exceed or are close to the $100k threshold.
How does it work?
Let’s start with an example of a vehicle that costs $110,000. Taxing the 10 percent of their total value would be $11,000. The difference between the price and the $100k mark is $10,000. And taxing 20 percent would be $2,000 considering it’s less than the overall value. If you didn’t understand that, let’s consider another example of a vehicle that costs $200,000. The 10 percent tax looks far cheaper than the 20 percent tax of the difference between them. There is still the option to buy the GMC Hummer EV that weighs 9,000 pounds and can be exempt from the tax.
CTV News claims the new tax could lead to a whopping $2.8 million in lost sales tax over the next five years. Not just the automotive sector, the million dollar value applies to all industries affected by Canada ‘s luxury tax law