What is the Luxury Car Tax?

If you live in BC, you know that our great little province is famous for paying a LOT of tax. Unfortunately, with vehicle purchases, it’s no different.

However, in Canada, there is an additional tax that is placed on vehicles with higher price tags. This is a federal tax, and it’s called the Luxury Car Tax.


What is the Luxury Car Tax exactly? It’s an additional tax applied to all higher priced vehicle purchases made in Canada. This is particularly focused on import vehicles, luxury vehicles, and aircraft and high-ticket vessels.

The amount of the increased tax amount will depend on the sticker price of the vehicle you’re buying, what kind of vehicle you’re buying, and whether or not you are a dealer or private purchaser.

How Can the Luxury Car Tax Affect Your Next Vehicle Purchase?

Depending on the type of vehicle you’re buying, the Luxury Car Tax could increase your bill substantially. Some vehicles may be small but come with a BIG price tag. The higher the price of the car, the higher the tax bracket. The Luxury Car Tax is broken down into 3 different tiers.

Tier 1 – For vehicles over $55,000 up to and including $56,999, the increased PST rate is 7% to 10%.

Tier 2 – For vehicles over $57,000 up to and including $124,999, the increased PST rate is 15 %.

Tier 3 – For all vehicles over $125,000, including aircraft and boats and vessels, the increased PST rate is 20%.

When purchasing a new vehicle from a dealership, the GST and PST combined is 12% of the cost of the vehicle. However, if you’re purchasing a higher priced car, you’ll see a total combined tax of up to 25%, depending on what vehicle you’re buying.


When we make a larger purchase of anything in BC, we as consumers definitely feel the price increase after tax. We’ve always been one of the highest provinces in the country for paying tax. What starts out at one price, quickly jumps to a much higher one after the tax gets applied. This is why the Luxury Car Tax hits consumers with higher vehicle purchases so hard.

Does the Canada Luxury Tax Apply to All Vehicles?

No, it doesn’t. There are certain criteria that the federal government has based this tax and how it’s applied on high-ticket vehicle purchases. So, before you make your next purchase, be sure to check if the tax even applies to you. You don’t want an attempt made to tax you on something that you are exempt from.

The following situations do not have the Luxury Tax applied to them:

  • Vehicles under $100,000
  • Vehicles made prior to 2019
  • Non-passenger specific vehicles (e.g. cargo vans, 1-ton trucks)
  • Vehicles with less than 4 weeks (motorcycles, trikes)
  • Vehicles designed to carry more than 10 people (buses, 15 passenger vans)
  • Any emergency vehicles such as ambulances, police cars, fire trucks, coroner vans, and hearses
  • Certain recreational vehicles


How Do I Know If the Luxury Tax Applies to My Purchase?

Generally, when dealing with a professional car dealership, they will know exactly when the Luxury Car tax is applied. Their internal systems will automatically apply the tax when it is warranted.

However, be careful with less reputable businesses. They may attempt to charge you the increased tax when it’s not applicable, just to pocket the extra money you’ve paid for your vehicle. Not all car buyers and sellers are as professional and reputable as Cash For Cars BC.

Which Vehicles Does the Luxury Tax Apply To?

With so many varying stipulations about what makes the tax applicable and what makes it exempt, we thought we’d present you an easy-to-read list of which vehicles are actually subject to the Canada Luxury Tax.

According to the Government of Canada website, it is applicable as follows:

Under subsection 2(1), subject vehicle means a motor vehicle that meets all of the following conditions:

  • it is designed or adapted primarily to carry individuals on highways and streets
  • it has a seating capacity of not more than 10 individuals
  • it has a gross vehicle weight rating that is 3,856 kg or less
  • it has a date of manufacture after 2018
  • it is designed to travel with four or more wheels in contact with the ground

If you’re thinking of buying a new vehicle and would like to offset the increased tax you’ll pay, sell your current car to Cash For Cars BC. NOBODY Pays More!

Thinking of Selling Your Car & Buying a New One?

Before you visit any of the local dealerships, and before you consider selling your car online, talk to Cash For Cars BC. We always offer the MOST cash for cars, trucks, SUV’s, vans, and motorcycles.

Even if you’re selling a boat, an RV, or any kind of power sport vehicle, we are always happy to make you an offer on the vehicle you’re selling. From $100-$100,00+, we buy every kind of vehicle, and in virtually any condition.

Why Choose Cash For Cars BC?

We buy more vehicles in Metro Vancouver, the Fraser Valley, and Vancouver Island than any other used car buyers. That’s because more people trust our professional, reliable car buying services based on our reviews and word of mouth.


Nothing speaks louder than a great review, and we’ve got lots of them. Just check us out on Google!

Plus, when you take care of all the things that make selling a car feel like a hassle, it makes people want to use your services again and again.

Sell Your Car to Cash For Cars BC for the MOST Cash Today

Did you know that most vehicles sold privately don’t sell for at least a month? One. Month. And that’s the bare minimum. Some vehicles take even longer to sell because there isn’t a high demand for them.

With Cash For Cars BC, we are the experts at buying and selling used cars, truck, SUV’s, vans, and motorcycles. That’s why you can sell your car to us the very same day you call us. Call at breakfast, and have your vehicle sold by lunch.

From start to finish, the entire process only take about 30 minutes. So, what kind of time frame are you hoping to sell your car in? 30 minutes? Or a month? Call us if you want your car gone today for the MOST cash.

Contact Our Used Vehicle Buyers

All it takes is a simple call, text, or email to have your vehicle sold for the MOST cash. Also, we operate 7 days a week, from 7:00am to 11:00pm. We even buy cars on most statutory holidays to better accommodate our customers!

That’s not the only way we make selling a car for cash in the Lower Mainland convenient either. We also handle all the paperwork, we come to you, and NOBODY Pays More!

By Published On: August 17th, 2023Categories: BlogTags: , ,

Have vehicle-related questions? Enter what you want to learn about in the search bar below

Share This Post With Your Friends, Choose Your Platform!

About the Author: cashforcars

Cash For Cars BC is a Vancouver based used car and truck buying service. We make the process easy to sell your vehicle. We come to you and we do all the paperwork. We always offer the most cash and pay on the spot. GIve us a call, text or email today to see how we can help you sell your car in Vancouver for the most possible money.