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Individual Tax

What is luxury car tax?

What is luxury car tax?
Sumire Uemura
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Luxury car tax

Luxury car tax (LCT) is a tax on cars that have a GST-inclusive value above the LCT threshold.

In general, 33% LCT will apply to the amount over the LCT threshold shown below: 

LCT is collected by your supplier/dealer registered to LCT and by individuals who import luxury cars. 

LCT is subjected to cars that are two years or less old at the time of supply if they were manufactured locally or imported more than two years previously. 

Note that the definition of a car here is a motor vehicle (but not a motorcycle) designed to carry a load of less than two tonnes and fewer than nine passengers. A limousine is classified as a car, regardless of the number of passengers it's designed to carry.

LCT is calculated as follows:

(LCT Value - LCT Threshold) x 10 / 11 x 33%

*LCT Value does not include Australian taxes other than GST, fees or charges such as stamp duty, transfer fees and registration, compulsory third-party insurance (CTPI), extended warranties, costs associated with financing the purchase of the car, and service plans.

Example Calculation

Matty Bee Motors (MBM) sells a car (not qualifying as fuel efficient) worth $88,000 including GST. The LCT value of the car is more than the LCT threshold ($76,950 for the 2023–24 financial year), so MBM must pay LCT on the sale of the car.

To work out the amount of LCT:

(LCT value − LCT threshold) × 10 ÷ 11 × 33%

($88,000 − $76,950) × 10 ÷ 11 × 33%

$11,050 × 10 ÷ 11 × 33%

= $3,315.

MBM charges the customer $91,315 ($88,000 including GST plus $3,315 LCT) for the car, excluding stamp duty, CTPI, registration and other charges.

MBM reports and pays $3,315 LCT on their next activity statement.

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