Canada Axes Luxury Tax on Boats
By Craig Ritchie
Fall 2025 budget rescinds wildly unpopular tax on boats, autos and aircraft which led to job losses while failing to meet revenue objectives.
The government of Canada released its fall 2025 budget late Tuesday including a move to rescind its highly unpopular luxury tax on boats, automobiles and private aircraft.
“This is a major victory for Canadian manufacturing and marine businesses,” said National Marine Manufacturers Association Canada (NMMA Canada) executive director, Marie-France MacKinnon. “We’re grateful to our members, our partners at the Canadian Marine Retail Association, and MPs from all parties who listened to the evidence and took action to protect Canadian jobs, local businesses, and consumers who want to enjoy time on the water with their families.”
Announced in 2021, the luxury tax assigned a levy of 20% of the retail value of new boats, cars and aircraft sold for private use above a prescribed $100,000 threshold, or 10% of the unit’s full value – whichever is the lesser. In April of 2022, marine trade associations including NMMA Canada succeeded in having the taxable threshold for boats raised to $250k. The luxury tax itself remained subject to federal sales tax.
Released late Tuesday, the fall 2025 Canadian federal budget includes a number of measures which distance the current government from policies instituted by former prime minister Justin Trudeau, headlined by the elimination of the luxury tax. Originally touted as generating new revenues of up to $176m in its first year, the tax ultimately brought in less revenue – just $12m – than it cost to administer. The tax was also shown to directly contribute to job losses.
“Budget 2025 provides an important win for Canada’s recreational marine sector by removing the luxury tax on boats,” said MacKinnon. “This decision reflects years of persistent advocacy by NMMA Canada, the Canadian Marine Retailers Association, our members, and grassroots supporters across the country. We thank the government for listening to the concerns of industry and thousands of Canadians who raised their voices in support of local marine businesses and the jobs they sustain.”