|Financial year||Fuel efficient vehicles||Other vehicles|
In this guide:
If you’re buying a luxury car in Australia, there’s more to the total costs than just a hefty price tag or expensive repair work. Depending on the value of the vehicle you want to buy, you could be stung with a luxury car tax.
Luxury car tax isn’t the same as stamp duty, which is calculated individually by each state. Instead, the federal government sets a threshold limit for different vehicle types each financial year to determine how much extra you’ll have to pay on your expensive car.
Here’s the lowdown on how it works, and how much it might cost you at the dealership.
The luxury car tax (LCT) is the tax you’ll pay when the cost of a vehicle you purchase exceeds what is called the LCT threshold. It applies to both new and used vehicles that were manufactured or imported less than two years ago.
The LCT threshold amounts can apply in other situations too.
For example, for electric vehicles (EVs) or plug-in hybrid electric vehicles (PHEVs) below the LCT threshold, there is a fringe benefits tax exemption (e.g. if the car is acquired through an EV novated lease).
Calculating your LCT is relatively simple. You pay 33% of the amount that exceeds the LCT Threshold. Here’s how you can calculate it in a few minutes.
On a $100,000 vehicle which is not classed as fuel-efficient, your LCT will be $8,445.30
LCT will almost always be included in the quoted price of the vehicle when buying from a dealership. The dealership will pay the LCT to the ATO on your behalf as part of the sale process.
Refunds can be claimed by the individual or business through the ATO.
Individual buyers who import a vehicle privately may also need to pay LCT if the vehicle's value is above the threshold.
There are a few ways that you can save on paying LCT.
The first is to claim a refund on your LCT if you are eligible to do so. Primary producers and tourism operators may be able to claim up to $3,000 on their LCT.
The second is to buy a fuel-efficient vehicle. The LCT Threshold for fuel-efficient vehicles is significantly higher than for non-fuel-efficient vehicles, so if you’re looking to do your part for the planet and save on cash, then this is an option to consider.
Lastly, if the vehicle you are buying isn’t a passenger vehicle, or is a modified vehicle designed for specific use (e.g. transporting wheelchair passengers) then the vehicle may be exempt from LCT.
Car Loans guides and resources
Where to next? Read our other car loan guides to understand more about your options for financing your next car.