What is Luxury Car Tax?

Luxury Car Tax (LCT) is a tax applied in Australia to the sale of high-end, luxury vehicles. It is designed to tax cars that are considered to be "luxury" due to their high value. The LCT is intended to target vehicles that exceed a certain price threshold, ensuring that people purchasing expensive cars contribute more to government revenue.

Key Features of the Luxury Car Tax:

1. Tax Threshold:

   • The LCT is applied to vehicles that exceed a certain GST-inclusive price threshold.
   • For the 2023–2024 financial year, the threshold is:
     • $71,849 for vehicles that are not fuel-efficient (i.e., those that do not meet a specific fuel efficiency criterion).
     • $84,916 for fuel-efficient vehicles (those with a fuel consumption of 7 liters or less per 100 kilometers).

2. The threshold is adjusted annually.

3. Rate of Tax:

   • The LCT is levied at 33% on the amount above the threshold price.

4. Exclusions:

   • Some vehicles, such as commercial vehicles (e.g., vans and utes primarily used for business purposes) and certain specialty vehicles (such as those designed for people with disabilities), are exempt from the LCT.

5. Who Pays the Tax:

   • The LCT is generally paid by the dealer or importer who sells or imports the luxury car. However, the cost of the tax is typically passed on to the buyer as part of the purchase price.