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 |
| 2023-24 | $89,332 | $76,950 |
| 2022–23 | $84,916 | $71,849 |
| 2021-22 | $79,659 | $69,152 |
| 2020-21 | $77,565 | $68,740 |
| 2019-21 | $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 |
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
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 for Luxury Car Tax explained easier –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 |
| $100,000 incl. GST | $71,849 | No |
| Subtract the GST from the vehicle amount.
$100,000 – $71,849 = $28,151 / 1.1 = $25,591.81
Find the payable LCT. $25,591.81 x 33% = $8,445.30
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Confused? Our team of brokers are here to support you, with Luxury Car Tax explained in a way that’s simple enough to understand. Let us help you navigate LCT when it comes time to purchase your next vehicle.
Support in Understanding LCT
If you’re looking to purchase a vehicle through finance and you’re still unsure about how to navigate Luxury Car Tax, get in touch with our team of experienced brokers. Thanks to our combined years within the industry, we have become a trusted source for those trying to understand LCT the right way, in order to make an informed buying decision. Another fantastic avenue for information is the Australian Taxation Office – providing the latest in LCT changes, threshold information, reporting and record keeping and so on.
Premium Car Tax Explained with Fido Finance
Our team are here to support our customers through the financing process from start to finish. Give us a call on 13 FIDO today for information on Luxury Car Tax or general vehicle finance loans – When you call Fido, a loan broker is here for you.
