Luxury car tax (LCT) is a tax on cars with a GST-inclusive value above the LCT threshold.
The threshold for 2015-16 is $63,184 (or $75,375 for fuel-efficient cars – those with a fuel consumption of 7 L / 100 km or less).
LCT is imposed at the rate of 33% on the amount above the luxury car threshold.
LCT is paid by businesses that sell or import luxury cars (dealers), and also by individuals who import luxury cars.
Luxury Car Tax
The Luxury Car Tax (LCT) is a tax within the Australian taxation system, collected by the Australian Taxation Office on behalf of the Australian Government.
LCT is payable by businesses which sell or import luxury cars, unless the business' Australian Business Number (ABN) number is quoted in the correct format to the supplier or Customs.
LCT is charged in addition to the Goods and Services Tax (GST), but it is not payable on the full price of the vehicle. LCT is only payable at the rate of 33% (up from 25% as of 1 July 2008, though no senate approval for this increase was obtained) of the value of the GST-inclusive value which exceeds the LCT threshold. The LCT threshold is currently $63,184.00 AUD (for the 2015-16 financial year). An increased threshold of $75,375.00 AUD applies to fuel efficient cars that have a combined fuel consumption rating not exceeding 7 litres per 100 kilometres (based on a combined test cycle rating under ADR81).
LCT is reported on an organisation's Business Activity Statement at labels 1E and 1F. An organisation is not required to complete the LCT section of their BAS when they have elected the GST Instalment Option as LCT is included in this amount. Organisations which report and pay GST annually are only required to report LCT on their annual GST return (GSTR)
Businesses are only permitted to quote their ABN when the vehicle is used for the following purposes:
The LCT becomes due and payable when you on-sell the luxury car or stop using it for a quotable purpose. This might happen if you hold a car as trading stock and start using it for private purposes or if it becomes a capital asset of your business.
When LCT Applies
Generally, you're required to pay LCT if you're registered or required to be registered for GST and you sell or import a luxury car – this includes retailers, wholesalers, manufacturers and other businesses that sell luxury cars.
You also have to pay LCT if you're an individual (private buyer) who imports a luxury car.
LCT applies to sales of cars that are two years old or less.
A car is more than two years old at the time of supply if it was manufactured locally or imported more than two years previously.
For LCT purposes, a car 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.
LCT applies to a car purchased by a person with a disability even if the car is GST-free. However, disability-related modifications are not subject to LCT.
Selling a luxury car
When you sell a luxury car in Australia it's subject to LCT if you sell it in the course of your business and you're registered or required to be registered for GST.
LCT applies in all of the following cases: