Important Things to Know About Taxes on Luxury Cars in Australia
For many Australians, purchasing a luxury car is a dream. Indicative of sacrifice, success and status, luxury cars symbolise prosperity and celebrate hard work paid off.
Though purchases in Australia are quite straightforward, many luxury cars are impacted by the Luxury Car Tax. Also known as the LCT, the Luxury Car Tax is a tax imposed on purchases of luxury vehicles over a specified value.
At Xoticar, we provide personalised advice on a range of luxury car purchases – including the LCT –and how much you’re required to pay. Learn more about what the LCT, how it’s changing and what it means for you with advice from the Xoticar team.
When is LCT Applicable?
The LCT is applicable for most luxury cars on the market – in addition to the GST payable. Depending on the year and type of vehicle you’re purchasing, the LCT comes into effect for vehicles priced at and higher than $60,000 and fuel-efficient vehicles at $75,000. Vehicles attract a tax rate of 33% of the portion of the value of the car above the LCT threshold, which varies each year. After you take into account GST and the LCT, the price of luxury vehicles can seem significantly more expensive than those available overseas.
Cost Comparison of Taxes on Luxury Cars in Australia
Compared to the cost of cars overseas, luxury cars in Australia can be pricy. Costs increase due to our isolation from manufacturing centres and the requirement of less common right-hand-drive layouts. One of the most significant costs impacting luxury car purchases in Australia is the LCT, sometimes requiring up to tens of thousands of dollars just for additional tax.
If you’re thinking of purchasing a luxury car, view the ATO’s LCT threshold table to discern how much you may have to pay.
LCT requirements can become confusing, especially when it comes to selling a car or buying a vehicle that’s already been imported. If you’re selling a vehicle less than two years old and the car has already had the LCT paid, you may be required to pay it again if its value has increased. But, the good news is that the payable LCT will decrease by the amount that’s already been paid. When purchasing a vehicle already imported, the LCT may be payable again. The tax is only waived for vehicles imported two or more years ago.
If you’re thinking of starting a luxury car sales business, additional taxation steps need to be taken. You’ll need to successfully register for GST followed by registering for LCT before you can begin trading.
Taxes on Luxury Cars in 2019 and Beyond
Negotiations of a free-trade agreement between Australia and the EU may see the LCT changed for European manufacturers. This would significantly drop the price of European vehicles, like cars from Mercedes-Benz, and benefit luxury car drivers across Australia.
A possible barrier to this reform would be the government’s revenue loss from collecting LCT from each luxury car purchase. A proposed solution involves phasing out the tax gradually to minimise the impact of lost revenue.
While nothing is set in stone, drivers are hoping to see a reduced LCT in 2019.
Browse Luxury Cars in Australia
Thinking of purchasing a luxury car in Australia? Explore a range of classic, muscle and luxury cars online with Xoticar. Contact us for expert advice on the LCT and secure your next luxury car with help from our professionals.