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Canada's Luxury Tax on Aircraft Is Repealed

MarketPlane.ca ·

Since November 5, 2025 the federal luxury tax no longer applies to aircraft. What Bill C-15 changed above $100,000, and which taxes you still have to pay.

The short version

Since 2022, Canada's Select Luxury Items Tax added a federal surtax to aircraft priced above $100,000, calculated as the lesser of 10% of the full price or 20% of the amount above the threshold. That tax is now gone for aircraft: the government announced in Budget 2025 that the luxury tax is no longer payable on subject aircraft and vessels effective November 5, 2025, and Bill C-15 (the Budget 2025 implementation act) made it law with royal assent in March 2026. The tax still applies to luxury vehicles, but for airplanes it's over.

What it used to cost

The old math stung exactly the buyers Canada's aviation market needs. A $250,000 aircraft carried up to $25,000 of luxury tax (10% of the price, since that was less than 20% of the $150,000 excess). A $500,000 turboprop-class purchase: up to $50,000. On a $1.5-million aircraft, the surtax could reach $150,000, enough to push Canadian buyers toward keeping aircraft registered elsewhere or not upgrading at all. That entire line item is now deleted from the closing statement.

What actually changed, precisely

Two documents matter. The Canada Revenue Agency's notice LTN5 confirms the luxury tax is not payable on subject aircraft and subject vessels as of November 5, 2025. Bill C-15, the Budget 2025 Implementation Act, amended the Select Luxury Items Tax Act to end the tax for aircraft and vessels, receiving royal assent on March 26, 2026. You can verify both at canada.ca (CRA LTN5) and parl.ca (Bill C-15).

What it means if you're buying

If you've been shopping above $100,000, whether a late-model piston, a floatplane with fresh everything or a King Air, your effective price just dropped by up to 10% compared to the 2022–2025 window, before you negotiate a dollar. It also simplifies the US-import math: the luxury tax used to stack on top of exchange, GST and duty when importing higher-value aircraft. Run your numbers in our US import calculator and ownership cost calculator, and note that GST/HST and provincial taxes are unchanged, so the rest of the closing math still applies.

The honest caveats

This article is general information rather than tax advice. Thresholds, timing rules and your personal situation matter, especially for transactions that happened near the November 2025 cutover or involve business use. Confirm specifics with your accountant. And if you're selling an aircraft that sat on the market through the luxury-tax years: the buyers it scared off are exactly who's coming back. It might be the right season to list.

Common questions

Did the luxury tax ever apply to typical piston singles?

Usually not. It only applied to aircraft priced above $100,000, so many older trainers and simple singles were never affected. It bit hardest on late-model pistons, turboprops and jets.

Do I still pay GST/HST or provincial tax on an aircraft?

Yes. The repeal removed only the federal luxury tax. GST/HST and, depending on your province and the transaction, provincial sales tax still apply as before.

Does the luxury tax still exist for anything?

Yes. It continues to apply to subject vehicles (luxury cars) above their threshold. The repeal covered subject aircraft and subject vessels.

What if my purchase happened around the cutover date?

Transactions near November 5, 2025 can raise timing questions about when delivery or importation occurred. If that's you, confirm the treatment with your accountant or the CRA before assuming either way.

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