Canada’s 2025 federal budget includes a commitment to remove the luxury tax on private planes and boats, which was first introduced in September 2022.
The policy – introduced by the Trudeau government – had drawn criticism from Canada’s marine industry for contributing to job losses, lower tax revenues and reduced sales.
According to trade association NMMA Canada, which advocated for the change alongside the Canadian Marine Retailers Association (CMRA), the removal of the tax will support boat manufacturing jobs, strengthen domestic production and help dealers recover sales to pre-tax levels. It is also expected to benefit middle-income workers employed across the marine sector.
The luxury tax introduced in 2022 applied to aeroplanes valued at more than CA$100,000 or boats valued at more than CA$250,000 (US$177,300). This tax was equal to the lesser of 10 per cent of the vehicle’s total value or 20 per cent of the value above the threshold. A levy on luxury cars worth over CA$100,000 (US$70,900) remains in place.
Removing the tax on planes and boats is expected to save buyers CA$135m (US$95.7m) over the next five fiscal years, the government estimated.
The budget says that “to provide relief to the aviation and boating industries and increase the overall efficiency of the luxury tax framework, budget 2025 announces the government’s intention to end the luxury tax on aircraft and vessels as of the day after budget day [5 November 2025].”
“This is a major victory for Canadian manufacturing and marine businesses,” says Marie-France MacKinnon, executive director of NMMA Canada. “We’re grateful to our members, our partners at the Canadian Marine Retailers Association and MPs from all parties who listened to the evidence and took action to protect Canadian jobs, local businesses and consumers who want to enjoy time on the water with their families.”
The industry expects the policy change to improve the outlook for domestic manufacturing and retail operations. “The retail sector across the country is ready to get back to work, to bring sales back to Canada and to reengage with many Canadian families whose boating dreams have remained on hold as they refused to pay this frivolous tax,” adds Rick Layzell, president of CMRA. “We know it will take some time to bring back the jobs already lost, but we are committed to reengaging both consumers and our workers.”
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