Increase to Luxury Car Tax Threshold
Understanding the luxury car tax (LCT) rates and thresholds is essential for businesses and individuals dealing with luxury vehicles in Australia.
The luxury car tax rate is an additional tax imposed on the value of luxury cars above the threshold. For vehicles acquired or imported on or after 1 July 2023, the luxury car tax rate is 33% of the vehicle’s value above the threshold.
The ATO has set the luxury car tax threshold at $77,565 for the 2023-2024 financial year. This means that luxury cars with a value above this threshold will be subject to the luxury car tax.
Businesses may be eligible to claim input tax credits. This applies for luxury cars used for business purposes. The amount of credit is calculated based on the luxury car tax paid and the extent to which the vehicle is used for business purposes.
Additional fuel-efficient vehicles may also be eligible for a reduced luxury tax rate. The ATO provides a fuel-efficient car limit, which is currently set at $77,565 for the 2023-2024 financial year. If a vehicle’s fuel consumption is equal to or below the fuel-efficient car limit, the luxury car tax rate is 25% of the vehicle’s value above the threshold.
It is important to note that luxury car tax is separate from other charges such as goods and services tax (GST) and stamp duty, which may also apply when purchasing a luxury vehicle.