What is luxury car tax?

Luxury car tax

Luxury car tax (LCT) is a tax on cars that have a GST-inclusive value above the LCT threshold.

In general, 33% LCT will apply to the amount over the LCT threshold shown below: 

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LCT is collected by your supplier/dealer registered to LCT and by individuals who import luxury cars. 

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LCT is subjected to cars that are two years or less old at the time of supply if they were manufactured locally or imported more than two years previously. 

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Note that the definition of a car here is a motor vehicle (but not a motorcycle) designed to carry a load of less than two tonnes and fewer than nine passengers. A limousine is classified as a car, regardless of the number of passengers it's designed to carry.

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LCT is calculated as follows:

(LCT Value - LCT Threshold) x 10 / 11 x 33%

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*LCT Value does not include Australian taxes other than GST, fees or charges such as stamp duty, transfer fees and registration, compulsory third-party insurance (CTPI), extended warranties, costs associated with financing the purchase of the car, and service plans.

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Example Calculation

Matty Bee Motors (MBM) sells a car (not qualifying as fuel efficient) worth $88,000 including GST. The LCT value of the car is more than the LCT threshold ($76,950 for the 2023–24 financial year), so MBM must pay LCT on the sale of the car.

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To work out the amount of LCT:

(LCT value − LCT threshold) × 10 ÷ 11 × 33%

($88,000 − $76,950) × 10 ÷ 11 × 33%

$11,050 × 10 ÷ 11 × 33%

= $3,315.

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MBM charges the customer $91,315 ($88,000 including GST plus $3,315 LCT) for the car, excluding stamp duty, CTPI, registration and other charges.

MBM reports and pays $3,315 LCT on their next activity statement.

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CTK Accounting is a full-scope accounting firm based in Wollongong, servicing clients nationally.

For advice on Tax, BAS, GST, Bookkeeping, and Payroll issues visit us at ctkaccounting.com.au

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