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Luxury Car Tax

If you’re looking to buy a luxury vehicle in Australia, it’s important that you understand luxury car tax. Read on to find out everything you need to know, including the answers to FAQs.

 

What is a luxury car tax?


Luxury car tax (LCT) in Australia is a tax paid by businesses or individuals who are importers or sellers of luxury cars. A luxury vehicle is defined as one that:

  • has a value (including GST and customs duty but excluding on-road costs) that’s above the luxury tax threshold,

  • is designed to carry less than 9 passengers and less than two tonnes (including limousines), and

  • is less than two years old.


Businesses that sell luxury vehicles need to be registered for both GST and the luxury car tax.

 

Luxury car tax threshold in Australia


There are two luxury car tax thresholds – one for fuel-efficient cars, and another rate for all other vehicles. LCT thresholds for the 2021/2022 financial year are $79,569 including GST for fuel efficient cars and $69,152 including GST for all other vehicles. The threshold increases each year based on annual increases in the consumer price index (CPI).

It’s not hard for non-luxury cars to exceed these thresholds, including top-of-the range four-wheel-drives and utes. The value of any vehicle includes the value of any parts or accessories imported for it at the same time.

Fuel efficient cars are defined as being those whose fuel consumption doesn’t exceed 7 litres per 100 kilometres. According to the latest figures, the average fuel consumption rate for all passenger cars in Australia is 11.9 litres per 100 kilometres.

 

How much is a luxury car tax in Australia?


The luxury car tax rate in Australia is 33% on the amount that exceeds the luxury tax threshold.  The LCT amount depends on:

  • whether the vehicle is fuel efficient or not

  • the value of the vehicle.


Below are two examples.

Example 1: Fuel efficient vehicle
A business imports a fuel efficient car worth $90,000 including GST and customs duty but excluding on-road costs. The LCT calculation is as follows:

Luxury car tax = (GST-inclusive vehicle value less the LCT threshold) x 33%

1.1

= ($90,000 - $79,569) x 33%

1.1

= $10,431 x 33%

1.1

=  $9,482.72 x 33%

= $3,129.30

 

Example 2: Non-fuel efficient car

A business imports a non-fuel efficient vehicle worth $90,000 including GST and customs duty but excluding on-road costs. The LCT calculation is as follows:

Luxury car tax = (GST-inclusive vehicle value less the LCT threshold) x 33%

1.1

= ($90,000 - $69,152) x 33%

1.1

= $20,848 x 33%

1.1

= $18,952.73 x 33%

= $6,254.40

 

Luxury car tax in Australia 2021


If you are running a business, LCT reporting and payments are done via your business activity statement (BAS), along with reporting and paying GST. Depending on your business turnover, this means you will pay luxury car tax monthly, quarterly or yearly. The LCT is usually passed on to buyers by dealers including it in the price of the vehicle.

You must keep all records of your LCT transactions for five years.

The luxury vehicle tax was introduced in 2000 with the stated aim of encouraging people to buy locally produced luxury cars from manufacturers like Ford and Holden. However, no vehicles are manufactured in Australia any more, but the tax remains.

As the old saying goes, ‘the only certainties in life are death and taxes’!

 

When does luxury car tax apply?


The luxury car tax applies to all non-exempt vehicles that exceed the LCT threshold.

It’s important to note that on-road costs like rego, insurance and stamp duty are not included in a vehicle’s value for LCT calculations.

 

Luxury car tax exemptions in Australia


LCT does not apply to:

  • commercial vehicles.

  • businesses with a registered ABN who purchase vehicles

  • vehicles that were imported or manufactured at least two years prior to being sold.


  • vehicles being sold as GST-free exports.

  • emergency vehicles (such as ambulance, police, firefighting, and search and rescue vehicles)

  • motor homes/campervans

  • any modifications made to a vehicle to cater for disabled people.


In addition, primary producers and tourism operators can claim a luxury car tax refund of up to $10,000 on any tax paid on one vehicle per year.

 

Does luxury car tax apply to used cars?


The LCT applies to any vehicle sold that’s less than two years old, so it can potentially apply to used cars. However, it would only apply if you buy a used vehicle whose value has increased during that time, which is very rare.

 

Luxury car tax FAQs


How much is customs duty on a luxury car?


The customs duty payable on an imported vehicle into Australia is 5% of its value. Customs duty is included in a vehicle’s value for LCT calculations.

 

How much is stamp duty when buying a luxury car?


Stamp duty rates vary between Australian States and Territories but will be based on the market value of the vehicle.

Stamp duty is a government tax that must be paid when there is a transfer of ownership on an asset.

 

How much does it cost to insure a luxury car?


This depends on a range of factors, including the:

  • type of policy you get

  • insurer choose

  • type of car you have (make and model)

  • value of your vehicle

  • whether there are any modification to your car

  • the age of your vehicle

  • your driving record and insurance claims history

  • where you live and whether the vehicle is parked in a secure garage at night.


We offer car insurance and can help you with a no obligation quote.

 

How much does luxury car rego cost?


Rego costs vary between Australian States and Territories. Check with the relevant government department of transport in your State/Territory.

 

What are the most popular luxury cars in Australia?


According to the most recent motor vehicle census figures from the Australian Bureau of Statistics, the most popular luxury cars in Australia are:

  • BMW

  • Mercedes

  • Audi

  • Lexus

  • Volvo

  • Porsche

  • Jaguar


 

Do luxury cars cost more to maintain?


This depends on the factors such as the make and model of your vehicle, as well as how much driving you do and the type of driving. However, if you choose a fuel efficient luxury car, you’ll save on petrol costs.

 

The bottom line


It’s important to factor in all your costs if you want to buy a luxury car, including all your on-road and ongoing maintenance costs as well as your upfront buying cost.  Buying a luxury vehicle is an important financial decision. If you need to explore finance options, you should get independent, professional advice.

 

How we can help


If you’re looking to buy a luxury vehicle and you need finance, talk to our brokers at Auto Car Loans. We can help to find you a great deal and we’ll save you time, hassle and money.

Whatever you do, don’t let yourself get talked into dealer finance at a car yard. If you do, you’ll end up paying more for your vehicle than you should.

We arrange vehicle finance for a living from a panel of over 50 lenders. We work for our car buying clients, not for dealers or lenders.

Call 1300 301 051 during business hours to get in touch with one of our expert vehicle finance brokers.

DISCLAIMER : The thoughts and opinions conveyed on this website are those of the authors only and are of a general nature. This does not constitute financial or general advice to you from Auto Loans Group. You should seek your own independent advice from a professional which is specific to your circumstances before considering any of the items referred to in this article, including finance, insurance, and car buying.