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Luxury Tax Update

CRA Issues New Guidance on Manufacturers Rebates

On November 21st, Canada Revenue Agency (CRA) issued guidance on the calculation of the Luxury Tax when considering third-party rebates such as those provided by manufacturers to consumers to encourage them to purchase vehicles.

This CRA guidance was issued without prior consultation with CADA or the vehicle manufacturers and comes completely out of the blue to industry and tax experts. The CRA web posting provides no technical insight and is unclear as to how the luxury tax is calculated going forward and perhaps retroactively. CADA shared the CRA information with manufacturers associations last week and we are working with them to clarify this latest approach. CADA is also working with MNP automotive tax experts on this issue.

In the absence of more CRA information, Dealers should consult the following links for more information but understand CADA and our tax experts are pressing for answers and justification.

  • CRA 
  • MNP 

For questions on this issue please contact Huw Williams in CADA’s Ottawa Office huw@cada.ca.

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