Canada's luxury car tax landscape involves two layers: a federal 10% Select Luxury Items Tax (SLIT) on vehicles over $100,000 since September 2022, plus BC's additional provincial surcharge. Understanding both helps you budget for a luxury vehicle purchase.
Federal Select Luxury Items Tax (SLIT)
The federal SLIT came into effect September 1, 2022, applying 10% tax on the amount above $100,000 for passenger vehicles. This includes:
- Passenger automobiles (sedans, coupes, hatchbacks)
- Sport utility vehicles (SUVs)
- Some pickup trucks configured as passenger vehicles
- Vehicles with GVWR under 3,856 kg
Luxury Car Tax by Province
Luxury Car Tax in Canada — 2025
| Province | Standard Rate | Luxury Surcharge | $150K Car Total Tax |
|---|---|---|---|
| Alberta | 5% GST | 10% federal over $100K | $19,500 |
| Saskatchewan | 11% GST+PST | 10% federal over $100K | $26,000 |
| Manitoba | 12% GST+PST | 10% federal over $100K | $27,500 |
| Ontario | 13% HST | 10% federal over $100K | $29,000 |
| BC | 12% GST+PST | 10% federal + 8% PST over $100K | $34,000 |
| Quebec | 14.975% GST+QST | 10% federal over $100K | $29,463 |
| Atlantic Canada | 15% HST | 10% federal over $100K | $31,500 |
SLIT Calculation Examples
- $110,000 vehicle: 10% x $10,000 = $1,000 SLIT
- $125,000 vehicle: 10% x $25,000 = $2,500 SLIT
- $150,000 vehicle: 10% x $50,000 = $5,000 SLIT
- $200,000 vehicle: 10% x $100,000 = $10,000 SLIT
BC's Additional Luxury PST Surcharge
BC is unique in applying an additional provincial PST layer on luxury vehicles above $100,000. The additional 8% PST applies to the amount above $100,000 on top of the base 7% PST. This means BC luxury vehicles pay 15% PST on the luxury portion, plus 5% GST, plus federal SLIT.
A $150,000 car in BC: Base PST $3,500 + Luxury PST $4,000 + GST $7,500 + Federal SLIT $5,000 = $20,000 total provincial + federal taxes.
How to Avoid or Reduce Luxury Tax
- Choose a vehicle with GVWR above 3,856 kg: Trucks and cargo vans are exempt from federal SLIT
- Price just below $100,000: A $99,000 vehicle pays no SLIT or BC luxury PST
- Consider a certified pre-owned program: CPO vehicles still pay full tax but may offer better pricing
- Business lease vs purchase: Business financing may have different tax treatment — consult a tax professional
Disclaimer: Luxury tax rules are set federally and by BC Finance. Rates and thresholds are current for 2025 but may change. Verify with CRA and your provincial finance ministry.