Canada Budget Eliminates Luxury Tax on Aircraft, Boats

Canada’s 10% luxury tax on aircraft and vessels has been repealed as of Wednesday, according to the Canadian Business Aviation Association. The Canadian government said the luxury tax proved to be “inefficient, costly to administer, and challenging for Canadian industries at a time of ongoing global economic uncertainty.”

The repeal of the luxury tax was a surprise announcement from panelists during the “O Canada”session at Corporate Jet Investor Miami 2025 this week. “About three-ish years ago, the Canadian government instituted a luxury tax on aircraft, essentially new aircraft, 10% on that,” said panelist and Levaero Aviation v-p of sales and business development Stan Kuliavas.

“So if you buy…a $10 million airplane, there's a $1 million luxury tax, and then you pay the sales tax on top of that. [It’s] not very business forward or friendly. A lot of people for years have been educating and lobbying the government that this is a very counterproductive measure of theirs. We were very happy to learn in our federal budget that was just tabled…they have eliminated the luxury tax.”

Co-founder and COO of charter operator Flight Club and managing partner at YYZlaw Ehsan Monfared told attendees that Bombardier averaged eight to 10 business jet sales in Canada before enactment of the tax. “Post-luxury tax, they were around the two-aircraft mark.” Already, he remarked, salespeoples’ phones were “absolutely blowing up on budget day, so that’s a really good sign.

“Fundamentally,” he added, “Canada's [philosophy] is changing to orient towards business investments, getting products to market, and making Canada competitive in a global marketplace.”

The Canadian business aviation market is growing, Kuliavas said. “It's not growing at a frantic pace. I would say that most of the transactions in Canada on an annual basis are turboprops, light jets, and long-range jets. Year to date, we've had probably 70-ish turboprop transactions…PC-12s, King Airs. But the fleet continues to grow…You’re going to see a lot of fleet renewal and fleet growth.”

“At least a fifth of our [charter] clients are new entrants to the market,” said Monfared. “They haven't ever owned an aircraft before. They definitely chartered, and they're getting pulled in. We still enjoy that post-Covid bump and value proposition where people started to see business aviation as a huge tool and asset, even just for the comfort of it. So there are new market entrants [and]…we end up having to be more involved and support them understanding how this market works.”