🚗 Luxury Tax Registration in Canada

The luxury tax under the Select Luxury Items Tax Act applies to certain vehicles and aircraft priced over $100,000, and certain vessels priced over $250,000. If you sell or import these items in Canada in the course of business, you may be required to register with the Canada Revenue Agency (CRA).

👥 Who Must Register?

You generally must register with the CRA as a luxury tax vendor if you are a:

  • Manufacturer of subject items
  • Wholesaler
  • Retailer
  • Importer

Subject items include vehicles and aircraft over $100,000 and vessels over $250,000 sold or imported in Canada.

📅 When to Register

You must apply for registration by the earlier of:

  • The day you first sell a vehicle, aircraft, or vessel above the relevant threshold
  • The day you first import such an item

Registering ahead of time helps ensure you can hold tax‑free inventory of subject items.

📝 How to Register

If your branch shares a business number with a head office, only the head office should register unless separate filings are needed (using form L500‑2).

📍 Best Registration Methods

  • Business Registration Online — fastest, easiest way to get a confirmation letter.
  • My Business Account (MyBA) — sign in, complete form L500 and upload it using the “Submit documents” function.
  • Postal Mail — send the completed L500 Luxury Tax Registration Application to the appropriate CRA tax centre.

You may also need additional forms:

  • L500‑1 — Non‑Resident: Records Kept Outside Canada
  • L500‑2 — Authorization to File Separate Luxury Tax Returns

These forms can be filed electronically via MyBA or mailed.

📬 After Registration

Once processed, CRA sends you a registration number and effective date. You can view your registration details in My Business Account.

If more than 30 days pass without confirmation, call CRA at 1‑877‑432‑5472.

❓ Additional Notes

If you fail to register when required, CRA may register you and assign a number. This could also result in penalties.

Registered luxury vendors can purchase from other registered vendors without paying the luxury tax at the time of sale, and may defer the tax on imported subject items until final sale.

📌 Context — What Is the Luxury Tax?

The luxury tax is a federal tax on the sale or importation of expensive vehicles, aircraft and vessels. In general, the tax is calculated at the lesser of:

  • 10% of the full value of the item, or
  • 20% of the amount above the relevant threshold ($100,000 for vehicles/aircraft; $250,000 for vessels).

This rule ensures higher‑priced luxury goods contribute more to public revenues.