What exactly is Luxury Car Tax (LCT)? Introduced in 2000, the LCT has made a big impact on individuals buying a car worth more than a specific amount. This luxury tax is also paid by dealerships on imported vehicles that surpass a certain value and was introduced as a means to stop people from racing to buy newly imported cars.
At the time of its introduction, it was an attempt at replacing Wholesale Sales Tax, which added a huge percentage onto imported cars. While this anomaly tax type has stirred conversation, there are a few general considerations to discuss – this will save you time, and even money, should you end up in the market for a new and what is considered an ‘expensive’ car. For luxury car tax explained in simpler terms, continue reading.
Learn more about How it Works with Fido Finance, if you’re interested in financing a vehicle. Whether for business, personal, or pleasure – we make it happen.
How LCT Works: Premium Car Tax Explained
When Does LCT Apply?
In Australia, and within the 2023-24 financial year, the Luxury Car Tax threshold was increased to $89,332 for fuel efficient vehicles, and to $76,950 for other types of vehicles. Anything that surpasses these amounts gets hit with the LCT – unfortunately, this includes accessories and any customisations that are applied before the vehicle is delivered (including GST). Vehicles from previous financial years will have different thresholds.
Example of thresholds:
|
Financial Year
|
Fuel Efficient Vehicles
|
Other Vehicles
|
|---|---|---|
For more detailed information, check out the Australian Government Luxury Car Tax Rate and Thresholds page.
When Does LCT NOT Apply?
Vehicles that are excluded from this tax include:
– Commercial vehicles used for goods
– Dual purpose commercial vehicles
– Trucks/vans carrying over 2 tonnes
– Motorhomes and campervans
– Emergency vehicles and GST free vehicles fitted for transporting passengers with a disability
Â
There are a lot of specifications to take into consideration when purchasing a vehicle close to or above the LCT threshold. If you’re unsure whether your vehicle applies, speak to a professional within the motor industry, such as a broker from Fido Finance, who will be able to explain Luxury Car Tax to you. We help our customers finance vehicles that oftentimes surpass the LCT threshold, and have become accustomed to explaining this tax in a way that is understandable.
Working Out The LCT Amount
Calculating the Luxury Car Tax can be relatively simple. The actual LCT aspect is 33% of the GST (inclusive) value of a car that exceeds the tax threshold – you pay that 33% then subtract the LCT threshold utilising the following formula.
|
Total Purchase Price of Vehicle
|
LCT Threshold
|
Fuel Efficient
|
|---|---|---|
Confused? Our team of brokers are here to support you with Luxury Car Tax. Let us help you navigate LCT when comes time to purchase your next vehicle.
