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Luxury Car Tax

What is the Luxury Car Tax?

The Luxury Car tax, which applies from 1 July 2000, is intended to prevent the cost of luxury cars falling below non-luxury cars as a result of the introduction of the GST (and removal of the wholesale sales tax luxury loading).

The portion of the cost of luxury cars that is above the income tax depreciation limit will be taxed at 25% in a single payment on the luxury car tax value less the luxury car tax threshold exclusive of GST. This tax will then be incorporated into net amount calculations thereby removing the need for further payments and administration.

What is a luxury car?

A luxury car is a car with a GST-inclusive value that exceeds the luxury car tax threshold. This threshold is equal to the GST-inclusive car depreciation limit for income tax purposes.

A car includes passenger vehicles designed to carry a load of less than two tonnes and fewer than nine passengers. Examples include limousines, station wagons, four-wheel-drive vehicles, light trucks, motor homes, campervans and hearses.

What is not a luxury car?

Cars such as prescribed emergency vehicles and certain vehicles for transporting disabled people are specifically excluded from the definition of a luxury car. However, the exemption does not extend to all vehicles used by a particular class mentioned in the exemption, only specific cars.

When is Luxury Car Tax payable?

Luxury Car tax is payable on all taxable supplies or taxable importations of luxury cars unless the recipient quotes their Australian Business Number (ABN) to the supplier or the Australian Customs Service. The system of quoting is designed to avoid the tax becoming payable until the car is sold at the retail level.

Who is entitled to quote an ABN?

Registered entities are entitled to quote their ABN in relation to a supply or importation of a luxury car where they intend to use the car for one of the following purposes only:

  • holding the car for trading stock, other than holding the car for hire or lease

  • carrying out research and development for the manufacturer of the car, or

  • exporting the car in circumstances where the export is GST-free under the GST legislation.

To assist with LCT, two worksheets are provided when completing Form GA.

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