All about Australia’s Luxury Car Tax
In July of 2000, the Australian legislature established a series of new taxes, including the goods and services tax (GST), which replaced wholesale sales tax, and the luxury car tax (LCT). Any entity, including wholesalers, retailers and manufacturers, supplying a taxable luxury vehicle, as well as any Australian who imports a taxable luxury car, will pay a 10 percent GST and an additional LCT if that vehicle exceeds a specific dollar value.
What is the Luxury Car Tax?
Australia’s Luxury Car Tax, also known as the LCT, is collected by the Australian Tax Office on those vehicles worth more than $57,466, the LCT threshold for the 2010-2011 financial year. The tax is usually payable when the vehicle is sold or imported at the retail level. The current rate of LCT is 33 percent.
How Do I Calculate My Tax Amount?
Luxury car tax applies only to the value of the vehicle above the LCT threshold. First, add your GST to the price of the car, and then deduct the LCT threshold — $57,466 — from the total.
For example, if the vehicle costs $70,000, you would pay $7,000 in GST, so your total would be $77,000. Subtract $57,466 to get $19,534.
Because the luxury car tax is calculated on the amount that exceeds the threshold, exclusive of GST, you must subtract a portion of the GST you added in previously. Multiply $19,534 times 10/11. You get $195,340/11, which reduces to $17,758.18, the number with which you calculate your LCT.
Multiply this number by .33 to find the LCT due, which in this case is $5,860.20.
So consider this addition when you’re wandering the lots of a Holden or HSV dealer – you may have to pay the LCT on top of your sticker price along with the usual duties and surcharges.
What If I Buy a Used Car?
A used car may be exempt from LCT in specific circumstances. If the car was sold on a retail basis prior to July 1, 2000 — the date that LCT was established — or imported before that date, it is exempt from LCT. Meanwhile, a domestically-manufactured luxury vehicle that is more than two years old, or if a car of a foreign make was first imported to Australia more than two years previously for private use, it is not subject to LCT. So this means that if you’re looking to buy a used 2008 H3 from your Hummer dealer, it will not be subject to LCT.
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