LTN5 Luxury tax not payable on subject aircraft and subject vessels
Luxury Tax Notice
November 2025
This notice provides information relating to the Government of Canada’s announcement in Budget 2025 that the luxury tax would no longer be payable on subject aircraft and subject vessels effective November 5, 2025.
Registrants in respect of subject aircraft and subject vessels should carefully review the information contained in this notice.
Except as otherwise noted, all statutory references in this notice are to the provisions of the Select Luxury Items Tax Act. The information in this notice does not replace the law found in the Act.
If this information does not completely address your situation, refer to the Act or contact your regional excise office for additional information. The offices are listed at Contact information – Excise and Specialty Tax Directorate.
Any commentary in this notice should not be taken as a statement by the Canada Revenue Agency (CRA) that the proposed amendments will be enacted in their current form.
On this page
Background
The Government of Canada implemented a luxury tax on sales, leases, or importations of and certain improvements to subject vehicles and subject aircraft priced or valued above $100,000 and subject vessels priced or valued above $250,000 (the relevant price thresholds).
The luxury tax came into effect on September 1, 2022.
Current status
On November 4, 2025, the Minister of Finance and National Revenue tabled Budget 2025, which included an announcement that the luxury tax would no longer be payable on subject aircraft and subject vessels effective November 5, 2025.
Under the proposed measure, the luxury tax would continue to be payable on subject vehicles priced or valued above $100,000 unless an exemption applies. For more information on the application of the luxury tax to subject vehicles, refer to Notice LTN2, Subject vehicles under the Select Luxury Items Tax Act.
Registration
Under the proposed measure, persons would no longer be required to register as a vendor in respect of subject aircraft and subject vessels after November 4, 2025.
Filing and reporting
Since the effective date of the tax measure would not align with the end of a quarterly reporting period, registrants in respect of subject aircraft or subject vessels with luxury tax payable for the period of October 1, 2025, to November 4, 2025, would have to report the amounts on the quarterly return for the period ending December 31, 2025.
Exemption certificates
Under the proposed measure, exemption certificates would no longer need to be provided for sales of subject aircraft and subject vessels priced or valued above the relevant price thresholds on or after November 5, 2025. Exemption certificates would still have to be retained for six years after the end of the year to which they relate.
Tax certificates
Under the proposed measure, tax certificates would no longer need to be applied for in respect of subject aircraft and subject vessels priced or valued above the relevant price thresholds on or after November 5, 2025.
Special import certificates
Under the proposed measure, special import certificates would no longer need to be applied for in respect of importations of subject aircraft and subject vessels priced or valued above the relevant price thresholds on or after November 5, 2025.
Information on registration cancellation
Under the proposed measure, registrations in respect of subject aircraft and subject vessels would be automatically cancelled on February 1, 2028, without any further action required by registrants.
A registrant in respect of subject vehicles that is also registered in respect of subject aircraft, subject vessels, or both would retain their registration in respect of subject vehicles.
Inspections
Section 130 provides that, for purposes of the administration and enforcement of the Act, the CRA may inspect, audit, or examine the records, processes, property, or premises of a person that may be relevant in determining the obligations of that person under the Act or the amount of any rebate to which that person is entitled under the Act and whether that person or any other person is compliant with the Act.
Under the proposed measure, registrants in respect of subject aircraft or subject vessels prior to November 5, 2025, would continue to be subject to inspections on or after November 5, 2025. Any assessment or rebate would be processed as necessary. The administration and enforcement provisions of the Act that are related to penalties, collection, and confidentiality of information would continue to apply.
Records
Section 88 provides that every person that pays or is required to pay an amount of tax, every person that is required under the Act to file a return, and every person that makes an application for a rebate must keep all records that are necessary to enable the determination of the person’s liabilities and obligations under the Act or the amount of any rebate to which the person is entitled under the Act and whether the person has complied with the Act. Persons that are required to keep records must retain them for a period of six years after the end of the year to which the documents relate.
Enquiries
For any questions related to the Act, contact the following office:
Excise and Specialty Tax Directorate
Canada Revenue Agency
Place de Ville Tower A 5th floor
320 Queen St
Ottawa ON K1A 0L5
Phone: 1-866-330-3304
Further information
For all technical publications related to the Select Luxury Items Tax Act, go to Luxury tax technical information.
For information on how to make a general or technical enquiry on the luxury tax, go to Contact information – Excise and Specialty Tax Directorate.
For information on how to request a ruling or interpretation related to the luxury tax, go to Requesting an excise and specialty tax ruling or interpretation.