Green is the magic word in today’s world. The federal tax department is signalling that it is ready to wholeheartedly jump on this bandwagon as well.
The minister of finance recently announced a couple of new environmental measures. One puts the federal government in the rebate game. If you buy a new fuel-efficient
vehicle, you can get money back directly from your friendly tax department.
The rebate of up to $2,000 is limited to cars that consume fewer than 6.5 litres per 100 kilometres. There are only 21 vehicles in Canada that qualify for the rebate and, of those, only four qualify for the full $2,000. Given their rather small engine and cabin size, few of these vehicles would be ideal workhorses for the farm.
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If the government gives a tax break on one side, it also has the uncanny ability to take away on the other.
The second measure, nicknamed the green levy, relates to vehicles that are not fuel efficient. It will replace the heavy vehicle weight tax. Starting with vehicles that consume 13 litres of fuel per 100 km, an excise tax of $1,000 will be applied to the price the dealer or importer pays the manufacturer. Vehicles that get 14 litres per 100 km face an excise tax of $2,000, 15 litres per 100 km $3,000 and 16 litres $4,000.
You can be certain that this tax will hit you, the end purchaser, when you sign the purchase agreement with a dealer.
There are about 100 models that will be affected by this tax. Some of the biggest gas guzzlers like Ferrari, Bentley and Rolls Royce fall into this category but they are hardly suitable for farm work either. However, some versions of the Jeep Grand Cherokee get dinged the full $4,000 tax.
Other SUVs made by Ford, GMC, Chrysler, Hummer, Toyota, Nissan and Range Rover take a hit of $1,000 to $3,000 per vehicle. The Canada Revenue Agency provides a list of 2007 model year vehicles and their associated fuel efficiency ratings and excise tax (if applicable) as published by Natural Resources Canada at
the following website: www.cra-arc.gc.ca/whatsnew/items/list_veh-e.pdf.
The government says the green levy will be applied to automobiles designed primarily for passenger use. Lumped under this definition are station wagons, vans and SUVs. The good news is that pick-up trucks and ambulances are excluded from the green levy. Vans equipped to handle 10 or more passengers and ones modified to hold an unfolded wheelchair will also get a break. In the latter case, the modification must be completed within six months of purchase.
This measure became effective March 20 so here is a tip if you are thinking about buying a vehicle.
Ask your dealer if he has the model you want in his inventory dated March 19 or earlier. This would get you a pass from paying the green levy. It is probably a wise move to ask the inventory date of the vehicle anyway, because the dealer may have applied the tax surcharge, inadvertently of course, to pre-March 20 inventory.
There is one other type of vehicle exempted from this tax.
I’m not certain, however, how comforted anyone would be to know that the hearse providing his last ride will do so free of the green levy on its sticker price.
Larry Roche is a tax analyst with farm taxation and planning specialists Farm Business Consultants Inc. He can be contacted at fbc@fbc.ca or call 800-860-7011.
