The tax will apply to:
As a result of the act, new vehicles and aircraft with a taxable amount over $100,000 and vessels with a taxable amount over $250,000 will be subject to a luxury tax. In specific situations, this tax will also be applied to the use of vessels or aircraft, as well as improvements made to vehicles, aircraft and vessels.
The tax would apply to vendors but would have an indirect impact on importers and purchasers of these “luxury” items. In some situations, the customer would remit the taxes in place of the vendor, such as when the vendor is an indigenous governing body.
The calculation of the tax will depend wholly on whether the transaction is a sale, improvement or lease. However, to give you an idea of the additional costs to consider, on most sales the tax would be the lesser of:
So, if you bought a vehicle for $150,000, the tax would be $10,000, which is the lesser of:
However, if you bought an aircraft for $650,000, the tax would be $65,000, which is the lesser of:
If you have questions about how the luxury tax will affect you or your business, please contact us today.