Exemption on sales of previously registered subject vehicles
In most cases, the luxury tax will not apply to sales of subject vehicles priced above the price threshold that have been previously registered with the Government of Canada or a province, as set out in subsection 19(2). However, the luxury tax will apply if the subject vehicle was registered only because of the sale and has never otherwise been registered with the Government of Canada or a province.
A subject vehicle is considered registered with a government if it is registered with or licensed by that government for the purposes of permitting that subject vehicle to travel on public roads within the jurisdiction of that government.
The luxury tax will also apply to sales of subject vehicles priced above the price threshold if a vendor is Her Majesty in right of Canada or a province, an agent of Her Majesty in right of Canada or a province, or an Indigenous governing body and the vendor imported the subject vehicle without the luxury tax applying. When the vendor later sells the subject vehicle to a purchaser, the purchaser will be liable for the luxury tax in accordance with subsection 18(2) even if the subject vehicle has been previously registered.
Example
A dealership that is a registered vendor of subject vehicles sells a used subject vehicle priced above $100,000. The subject vehicle was previously registered with the province of Alberta.
The luxury tax will not apply to this sale as the used subject vehicle has been previously registered with the Government of Alberta.