Registering a luxury vehicle costs more - but how much more?
Since September 1, 2022, the Tax on Certain Luxury Goods Act has been in force in Canada. As a result, a federal luxury tax is applied to new, unregistered vehicles valued at over $100,000.
In Quebec, it also costs more to register a large number of vehicles - new and used. This is what the Société de l'assurance automobile du Québec (SAAQ) calls additional registration fees for luxury vehicles.
These fees must be paid when the vehicle is registered, and again when the registration is renewed each year. We refer to passenger cars and light trucks that meet the following three criteria:
- net mass of 3,000 kg or less;
- of 7 years of age or younger;
- value of over $40,000.
The amount payable is 1% per year, calculated on the portion of the vehicle's value that exceeds $40,000. Clearly, the SAAQ doesn't have the same definition of a luxury vehicle as the rest of Quebecers. Remember that the average price of a new vehicle in the province is currently approaching $60,000! Inflation, you say?
If you own a Chevrolet Silverado pickup worth $55,000, for example, the registration surcharge will be $150 (1% of $15,000).
Some owners benefit from an exemption from paying additional registration fees. Since January 1, 2018, this has been the case for all all-electric battery or fuel cell (hydrogen) vehicles, as well as plug-in hybrids costing $74,999 or less. Above the latter amount, additional duties apply to plug-in hybrids (for the excess starting at $40,000). The same applies to electric vehicles from $75,000 to $124,999 (for the excess over $75,000). There is no exemption for models costing $125,000 or more, and their additional duties are calculated from $40,000.
To determine the value of a vehicle, the SAAQ refers to recognized valuation guides. These guides determine the average wholesale price of different vehicles in different years. For electric or plug-in hybrid vehicles, the manufacturer's suggested retail price (MSRP) is considered.
When the depreciated value of the vehicle reaches one of the thresholds predetermined by the Go Green program, the additional registration fee is automatically reduced or waived. For example, for an all-electric vehicle valued at $80,000, the fee is charged $5,000, i.e. the difference between $75,000 and the value of the vehicle. Following the applicable depreciation, if the vehicle's value falls below $75,000, it becomes exempt from duty.
