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The 2025 Federal Budget introduces several impactful changes for Canada's aviation sector, with direct implications for aircraft owners, operators, vendors, and infrastructure stakeholders.
Luxury Tax on Aircraft Eliminated
Effective immediately, the federal government has repealed the Select Luxury Items Tax on aircraft valued over $100,000. This includes the removal of vendor registration and filing obligations by the end of 2025, with automatic deregistration by February 2028.
Client Impact: Aircraft purchasers and lessors will benefit from reduced acquisition costs and simplified compliance. Vendors can expect improved cash flow and operational efficiency, while the broader aviation market gains competitiveness and liquidity.
Infrastructure Investment & Legislative Amendments
The budget allocates funding to modernize airport infrastructure, extend lease terms, and attract private investment. Amendments to the Aeronautics Act and Canada Transportation Act are also planned to enhance safety and regulatory clarity.
Client Impact: Airport operators and service providers will see increased stability and partnership opportunities. Infrastructure upgrades are expected to improve operational capacity and investor confidence across the sector.
Enhanced Screening Technology
Canada Air Transport Security Authority will receive funding to deploy AI-driven screening systems at Canadian airports, aimed at improving passenger flow while maintaining current staffing levels.
Client Impact: Airlines and airports can expect faster screening, reduced wait times, and improved passenger satisfaction—potentially translating into higher throughput and revenue opportunities.
Next Steps
Fasken's Aviation and Transportation teams are available to advise on how these changes may affect your operations, transactions, or strategic planning. Please contact your relationship partner or reach out to our team directly.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
