The luxury car tax (LCT) is a tax on cars with a GST inclusive value above the LCT threshold ($66,331 as at 2018/19). LCT is imposed at the rate of 33% above the LCT threshold. LCT is paid by businesses that sell or import luxury cars, and individuals who import luxury cars. Taxpayers can avoid the luxury car tax if they willing to be flexible about the luxury car they purchase.
Seven strategies to avoid the luxury car tax are:
- Purchase a fuel-efficient car (maximum 7 litres per 100/km) as a higher threshold of $75,526 applies.
- Lease the vehicle instead of buying.
- Omit some extra features to reduce the purchase price below the LCT threshold. The features can be added after purchase if necessary.
- Purchase a vehicle at least 2 years old (The LCT doesn't apply irrespective of the value of the vehicle).
- Buy the vehicle for commercial use. The LCT doesn't apply to vans, trucks, & utes that are commercial vehicles.
- Most primary producers can claim refunds of 8/33 of the LCT they have paid, up to a maximum of $3,000. This is the difference between the current LCT rate of 33% and the previous LCT rate of 25%.
For more information see our blog post Luxury car tax introduced in 2000.