Luxury Tax Exemption for Export Vehicles

Purpose: To guide buyers on how our company is registered with CRA for Luxury Tax exemption. This ensures that when vehicles over $100,000 CAD are purchased for export, no luxury tax is applied, provided the correct form is completed at the dealership.

1. Background

• Canada charges a Luxury Tax on new vehicles over $100,000.

• Rate = Higher of:

  • 10% of total value, OR

  • 20% of value above $100,000.

Normally, dealers must charge this tax.
But: Our corporation is a CRA-registered exporter, which means if the sale is for export and documented, the tax does not apply.

2. Dealer Forms and Documents

Dealers use CRA-prescribed forms to process the exemption:

1. Form L500 – Luxury Tax Rebate/Exemption Form

   • Primary form to record that the vehicle is sold for export.

   • Dealer enters VIN, buyer corp name, price, and export details.

   • This is kept on file in case of CRA audit.
     
     

2. Export Statement (Schedule A)

   • Lists vehicles/VINs.

   • Confirms vehicle will not be registered in Canada.

   • Confirms export status.
     
     

3. Buyer Responsibilities

• Never register the vehicle in Canada (no plates).

• Ensure the dealer provides the NVIS (New Vehicle Information Statement), not a Canadian registration.

• Provide the foreign buyer’s details (end client or overseas dealer).

• Obtain export proof (Bill of Lading, customs clearance).
  
  

4. Dealer Responsibilities

When purchasing, tell the dealer:

• Our company is CRA-registered for exemption.

• They must:

  1. Print the CRA L500 form.

  2. Add the vehicle(s) on the form.

  3. Keep the form on file and deliver vehicle to us tax-exempt.
     
     

5. Compliance Notes

• Cars must be exported quickly (typically within 30–60 days).

• CRA can audit — keep all paperwork (Purchase Agreement, BOS, NVIS, Bill of Lading, export docs).

• If a dealer insists on charging the tax, it can be reclaimed with Form L500 once export proof is shown — but this ties up cash, so exemption upfront is preferred.
  
  

✅ Summary for Buyers:
We are already registered with CRA. All you do is remind the dealer: “Print the CRA luxury tax exemption form, add the VINs, and process under our corp.” Once that sheet is filled, the car is tax-exempt for export.

(This table mirrors what the dealer fills out on the CRA L500/Schedule A forms — each VIN is tied to export status, exempting the tax.)