Canada Cancels Luxury Tax, Giving New Boost to the Industry

On Tuesday, Canada turned the page on a controversial tax. The day after the federal budget was tabled, the luxury tax on aircraft and pleasure boats will no longer be payable. Targeting goods worth more than $250,000 for boats and $100,000 for aircraft, it had angered a highly strategic industry, which accused the government of penalising manufacturing excellence and national expertise. From now on, only new high-end cars will be liable for this surcharge.

Canada is thus marking a strategic turning point in its relationship with the world of luxury goods. Introduced in 2022, the measure had shown its limitations: while it had increased tax revenues, it had also caused buyers to flee to places managed by so-called more welcoming administrations.
This abolition, which took effect the day after the federal budget was tabled, will have only a modest fiscal cost – $135 million less in government coffers over five years – but considerable symbolic significance. By removing the tax, Ottawa is signalling its intention to reintegrate luxury into the national narrative, so that it can continue to promote the country on the world stage.
The first winner is undoubtedly Bombardier, Quebec's flagship business aviation company. The company expects to create around 600 jobs in the coming years thanks to the revival in demand. Freed from a tax burden that encouraged customers to register their aircraft abroad, the manufacturer is regaining momentum.

Partners specialising in maintenance, refurbishment and customisation—from interior finishing workshops to aeronautical designers—should also benefit from this upturn.

On the nautical side, the announcement is already having a positive effect. Canadian shipyards such as Neptunus Yachts, Doral International and Campion Marine were hit hard by the 2022 tax. Many buyers preferred to cross the border to purchase their boats in the United States, where taxation was more flexible. The result was a 30% to 70% drop in sales, depending on the segment, and the threat to rare expertise in the construction of semi-custom yachts.

The abolition of the tax could reverse this trend. Wealthy buyers, often attached to a certain economic patriotism, now have a reason to invest locally again. For shipyards, this is an opportunity to reposition their models in the premium segment: more customisation, more options, more exclusivity.

Beyond its borders, Canada's decision resonates throughout the global luxury ecosystem. While some countries are increasing taxation on ostentatious goods, Canada is taking the opposite approach: supporting industrial prestige to preserve competitiveness. For major international brands — Dassault Aviation, Gulfstream, Benetti, Sunseeker — the signal is clear: the Canadian market is becoming attractive again. European yachting and private aviation companies, which considered Canada a marginal market due to the tax, may now reconsider their ambitions.

The abolition of the tax also paves the way for more prestigious events, from boat shows to business aviation exhibitions. The measure goes beyond a simple economic issue: far from being a mere tax break, Canada's decision reflects a cultural shift away from viewing luxury as a ‘privilege’ to be taxed, and toward seeing it as an industry of excellence to be cultivated. Rather than stigmatising high-end goods, Canada intends to promote the innovation and job opportunities they generate.