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Luxury Car Tax

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The Luxury Car Tax (LCT) is a tax within the Australian taxation system, collected by the Australian Taxation Office on behalf of the Government of Australia. It was introduced under A New Tax System (Luxury Car Tax) Act 1999 by the Howard government.,[1] and commenced on 1 July 2000.

Description

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LCT is payable by businesses which sell or import luxury cars, unless the business's Australian Business Number (ABN) number is quoted in the correct format to the supplier or Customs.

LCT is charged in addition to the Goods and Services Tax (GST), but it is not payable on the full price of the vehicle. LCT is only payable at the rate of 33% (up from 25% as of 1 July 2008, though no senate approval for this increase was obtained) of the value of the GST-inclusive value which exceeds the LCT threshold. As of 2024, the LCT threshold is $80,567. An increased threshold of $91,387 applies to fuel efficient cars that have a combined fuel consumption rating not exceeding seven litres per 100 kilometres (based on a combined test cycle rating under ADR81).[2]

LCT is reported on an organisation's Business Activity Statement at labels 1E and 1F. An organisation is not required to complete the LCT section of their BAS when they have elected the GST Instalment Option as LCT is included in this amount. Organisations which report and pay GST annually are only required to report LCT on their annual GST return (GSTR)

Businesses are only permitted to quote their ABN when the vehicle is used for the following purposes:

  • Exporting the vehicle in circumstances where the export is GST-free
  • Conducting research or development for the vehicle's manufacturer
  • Holding the vehicle as trading stock (not including for rent or leasing purposes)

The LCT becomes due and payable when you on-sell the luxury car or stop using it for a quotable purpose. This might happen if you hold a car as trading stock and start using it for private purposes or if it becomes a capital asset of your business.[3]

LCT thresholds

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When you import or sell a car with a value above these thresholds, you must pay LCT except in specific circumstances.[4]

Financial year Fuel efficient vehicles[5] Other vehicles
2024–25 $91,387 $80,567
2023–24 $89,332 $76,950
2022–23 $84,916 $71,849
2021–22 $79,659 $69,152
2020–21 $77,565 $68,740
2019–20 $75,526 $67,525
2018–19 $75,526 $66,331
2017–18 $75,526 $65,094
2016–17 $75,526 $64,132
2015–16 $75,375 $63,184
2014–15 $75,375 $61,884
2013–14 $75,375 $60,316
2012–13 $75,375 $59,133

LCT statistics

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Luxury Car Tax statistics can be found in the Taxation Office's publication Taxation Statistics.

Criticism

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There has been calls from the industry peak bodies such as the Federal Chamber of Automotive Industries (FCAI), the Australian Automotive Association (AAA) and the Australian Automotive Dealer Association (AADA) to abolish the tax.[6] They claim the tax was designed to protect local automobile manufacturing industry which no longer exist as the big three manufacturers Toyota, Ford and Holden ceased operations in the 2010s.[6]

There has been a suggestion to increase the LCT threshold or give farmers exemption.[6]

References

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  1. ^ A New Tax System (Luxury Car Tax) Act 1999 (Cth) www.legislation.gov.au
  2. ^ Luxury car tax rates and thresholds Australian Taxation Office
  3. ^ "Luxury car tax – how to complete your activity statement". Australian Taxation Office. 2007. Archived from the original on 27 September 2007. Retrieved 7 July 2007.
  4. ^ "Luxury car tax rate and thresholds". Australian Taxation Office. 2024. Retrieved 28 June 2024.
  5. ^ A fuel-efficient car is a motor vehicle that has a combined fuel consumption of 7 litres per 100km or less. In the case of the luxury car tax, these cars are subject to higher tax thresholds that are set due to their lower environmental impact. "How to Calculate Luxury Car Tax (LCT)". Gradient Information Systems. 2024. Retrieved 28 June 2024.
  6. ^ a b c "Luxury Car Tax: Industry, MPs renew calls to scrap "bad tax" | CarAdvice". CarAdvice.com. Retrieved 23 February 2020.
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