The tax on luxury cars got cheaper

Got your eye on a luxury car that’ll make your mates jealous? Or perhaps something that’s a little more fuel-efficient and environmentally friendly?

A recent new tax change could help you buy something a little more la-de-da and it’s called the luxury car tax (LCT) threshold.

Basically, if you buy an imported car with a GST-inclusive value above the LCT threshold, the tax man slugs you with an extra 33% tax on the exceeded amount (minus the GST component).

But, the good news is the LCT threshold has just been given a decent boost – the third one in a row.

The threshold has been boosted by $5,257 to $84,916 for fuel-efficient vehicles and by $2,697 to $71,849 for other regular vehicles (all inc. GST).

According to the ATO, a fuel-efficient vehicle is one with fuel consumption that doesn’t exceed 7.0L/100km on the combined cycle.

If you’re interested in purchasing a luxury car or finding out more about the LCT, a QPF expert can help you today.

This threshold boost isn’t just good for people wanting to buy a vehicle under the threshold.

It’ll also make cars above the threshold more affordable, too.

Say you want to buy a Tesla Model 3 Performance, which has a GST-inclusive price of $93,325.

Under last financial year’s LCT threshold of $79,659 for fuel-efficient vehicles, you would have paid a LCT tax of $4,100 (exceeds LCT threshold by $13,666, subtract GST component paid, multiply by 33% = $4,100 LCT).

But now that the LCT threshold for fuel-efficient vehicles has been boosted to $84,916, you would only pay LCT of $2522 ($8,409 – GST component paid x 33% = $2522).