Select Luxury Items Tax Calculator Canada

What the luxury tax calculator does

The calculator prices the federal luxury tax on a Canadian vehicle purchase and adds the GST or HST charged on top. Enter what you are buying, the price before tax, the province of delivery, and any freight or factory-option charges that are part of the sale. It reports both statutory tests, the lesser figure that applies, the sales tax, and the total cost.

A worked example

A $140,000 vehicle in Ontario. Test A is 20% of the $40,000 over the threshold, $8,000; Test B is 10% of $140,000, $14,000. The lesser, $8,000, applies, an effective luxury tax rate of about 5.7%. HST at 13% is charged on $148,000, $19,240, of which $1,040 is HST on the luxury tax itself. Total taxes are $27,240 and the total cost $167,240, about 19.5% in tax on the price.

The two tests and why the lesser one wins

Just above $100,000, Test A is small because the amount over the threshold is small. Each extra dollar of price adds 20 cents of tax, so the effective rate climbs quickly until the price reaches $200,000, where both tests give $20,000. Above that, Test B is always smaller and the tax is a flat 10% of the price.

So between $100,000 and $200,000 every extra dollar of price costs 20 cents of luxury tax; above $200,000 it costs 10 cents. The band just above the threshold is the most expensive at the margin.

Sales tax on a tax

GST or HST is calculated on the price including the luxury tax. In a 15% HST province that adds 15 cents of sales tax to every dollar of luxury tax. It is small next to the luxury tax but often left out of budgets, and on an expensive vehicle it can reach thousands of dollars.

Provincial sales taxes in British Columbia, Saskatchewan and Manitoba, and QST in Quebec, have their own rules for vehicles, sometimes their own luxury surcharges, and their own trade-in treatment. They are not included, so in those provinces add the provincial charge separately.

Aircraft and vessels are out of the charge

The tax originally covered vehicles, aircraft and vessels above their thresholds. On November 5, 2025, aircraft and vessels were removed. The calculator keeps them in the list because the question is common; selecting one returns a zero luxury tax while still calculating GST or HST. For a transaction near that date, check when the sale completed rather than when the boat or plane was ordered.

What forms part of the taxable amount

The taxable amount is the vehicle price plus charges that are part of the same sale: freight, pre-delivery inspection, factory-installed options and, in most cases, dealer-installed accessories fitted before delivery. Adding them can be the difference between crossing the threshold and staying below it. A trade-in does not reduce the federal taxable amount. Improvements made after delivery that raise the vehicle’s value can bring a further charge under separate rules, which this tool does not cover.

Reading the results

The main figure is the luxury tax payable, with both test amounts below it. If they are close, you are near $200,000 and the effective rate is at its peak. A zero threshold means the item is outside the charge, either an aircraft or vessel or a price below the threshold. Use the total tax as a share of price when working out what the purchase really costs.

Assumptions and limits

The calculator assumes a straightforward retail purchase of a new subject vehicle from a registered vendor in the province you select. It does not model leases, imports, improvement charges, exemptions for qualifying uses, provincial sales tax, registration, insurance or dealer fees outside the sale. The threshold, rates and GST/HST rates are maintained parameters based on CRA guidance.

This is an estimate for planning a purchase, not a tax determination or financial advice. Confirm the charge with the vendor and the CRA before relying on it.

About This Luxury Tax Calculator

Use this luxury tax calculator to get an instant, accurate estimate. The figures follow official CRA guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.