New and updated Luxury Car Tax rate – 33%

Luxury Car Tax is payable to the Australian Tax Office for all vehicles purchased whose price exceeds the luxury car tax threshold (currently $59,133 for the 2012/2013 financial year (increased from $57,466 in 2010/2011)) except for the cases described below. Australia has one of the toughest taxing systems for new cars in the developed word and despite this particular tax being pitched as a ‘luxury car tax’, it affects an increasing number of what most poeople would consider mainstream new cars.

Thankfully, Luxury Car Tax is payable only on the purchase amount exceeding this limit – not the entire purchase price.

In short, Luxury Car Tax is calculated as 33% of the GST exclusive portion of the vehicle purchase price over $59,133. It can be calculated using the following steps:

• Calculate the amount subject to LCT. Take the full price of the vehicle and subtract $59,133. For example a vehicle whose GST inclusive price is $100,000 has $100,000 less $59,133 which equals $40,867 subject to Luxury Car Tax
• Find the GST exclusive portion of the above figure. The easiest way to do this is to multiply the figure by 10 and then divide by 11. In the above example: $40,867 x 10 / 11 leaves $37,152
• Thirdly multiple this above figure by 33% to calculate the LCT component on the vehicle price. In our example $37,152 x 33% leaves $12,260 of luxury car tax.

The Luxury Car Tax should then of course be added onto the GST inclusive price of the car. The supply price for the above example would be $112,260

There are a number of cases where Luxury Car Tax does not apply on vehicle purchases over $59,133:

• if the vehicle was sold or imported prior to 1st July 2000
• if the car is supplied over two years following the local build date or, if imported, the vehicle compliance date.
• if it is an emergency vehicle (eg ambulance etc)
• if it is not GST-free and is specially fitted out for transporting disabled people seated in wheelchairs
• if it is a campervan or motor home
• if it is a commercial vehicle that is not designed for the principal purpose of carrying passengers.
• if the vehicle is supplied by private sale
• if the vehicle has a combined fuel consumption rating not exceeding 7 litres per 100 kilometres (based on a combined test cycle rating under ADR81). In that case it is deemed a fuel efficient vehicle and benefitrs from an increased threshold to $75,375.00 AUD

For more information on Luxury Car Tax, please download the following publication from the ATO – luxury_car_tax2.pdf (378.39 Kb)

Another important consideration for your new vehicle purchase other than luxury car tax is stamp duty. Click here to find out about how stamp duty affects vehicle purchases in your state and how LCT calculations may change in 2012/2013