LCT- Luxury Car Tax
- Arnold Shields
- Apr 24, 2023
- 3 min read
Updated: May 15
If you're looking to purchase a high-end vehicle in Australia, it's essential to factor in Luxury Car Tax (LCT) — an additional tax levied by the Australian Taxation Office (ATO) on certain vehicles that exceed a set value threshold.
What is Luxury Car Tax?
LCT is a 33% tax applied to the portion of the car’s value that exceeds the ATO’s annual threshold. It’s designed to discourage the purchase of high-end vehicles, while also generating revenue.
For the 2022–23 financial year, the LCT thresholds are:
$84,916 for fuel-efficient vehicles
$71,849 for all other vehicles
These thresholds are reviewed annually.
How is LCT Calculated?
To calculate the LCT, use this formula:
LCT = 33% × (Car Value − LCT Threshold)
Example:
If a car is priced at $100,000 (including GST) and the threshold is $71,849:
LCT = 33% × ($100,000 − $71,849)LCT = 33% × $28,151 = $9,289.83
Total cost to the buyer: $109,289.83
While LCT is payable by the seller (usually the dealer), it’s typically passed on to the buyer as part of the sale price.
What Vehicles Are Subject to LCT?
Not all vehicles are caught by the LCT net. A vehicle must meet all of the following criteria to be subject to LCT:
Be designed to carry less than two tonnes
Carry fewer than nine passengers
Have a retail value above the LCT threshold
Not be classed as a commercial vehicle (e.g., utes, vans)
Examples of vehicles that may attract LCT:
High-end SUVs
Luxury sedans
Sports cars
Imported prestige vehicles
What's Included in the LCT Value?
The LCT value is not just the sticker price. It includes:
Retail price of the vehicle
GST and any customs duty
Dealer delivery charges
Warranties
Factory-fitted accessories or modifications made before delivery
LCT Exemptions and Concessions
Some vehicles and buyers qualify for exemptions or reduced rates:
Exemptions
Vehicles designed to carry over two tonnes or nine or more passengers
Commercial vehicles (e.g., work utes)
Vehicles modified for disability access
Diplomatic exemptions in some cases
Fuel-Efficient Vehicle Concession
Fuel-efficient cars (less than 7.0L/100km) have a higher LCT threshold of $84,916.
Resale Concession
If a luxury car less than two years old is being resold, the LCT may be reduced based on the amount already paid when the car was first sold. The new LCT is based on the new sale price, less the original LCT.
Final Thoughts
Luxury Car Tax can significantly impact the cost of a high-end vehicle. If you're thinking about purchasing one, speak with a tax professional to understand your obligations and explore any available concessions or exemptions. At Dolman Bateman, we help clients across Australia with vehicle tax queries and ATO compliance.
Want to be sure your next purchase is tax-smart?📞 Call us on (02) 9411 5422 or book a consultation today.
Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.
