Text size
Published
Text size
Despite the many media reports about the imminent scrapping of Australia’s Luxury Car Tax (LCT), there has been no announcement yet from the government about whether it’s staying or going.
The LCT, first introduced in 1999, currently applies to new vehicles costing more than $80,567. For a vehicle classed as ‘fuel efficient’, the LCT doesn’t kick in until it costs more than $91,387.
The current definition of fuel efficient is those vehicles with a claimed fuel consumption of 7 litres per 100km or less. As of 1 July, that’s set to come down to 3.5 litres per 100km, meaning more vehicles will attract LCT starting from $80,567.
The tax is applied at 33c to every dollar above the two price thresholds above, with the thresholds indexed to CPI and reviewed annually.
The recent speculation about the LCT potentially being scrapped has come as negotiations have been taking place on a free trade agreement with the European Union and would be welcome news for many luxury European automotive brands.
While it’s good news for manufacturers, dealerships and car buyers, there is a concern about the impact axing the tax will have on the resale value of vehicles previously captured by the LCT.
The LCT was originally introduced to protect Australia’s car manufacturing industry. Since the demise of local car makers, the industry has a view that the LCT is no longer fit for purpose.
Car buying trends would also suggest there are now many popular cars on Australian roads that are valued at more than $80,000 such as Toyota LandCruisers.
