What luxury car stamp duty means to you

Victorian treasurer Tim Pallas has announced in his budget for the 2019-20 financial year that to balance the books the state government would increase the stamp duty on vehicles priced above $100,000.

Stamp duty is currently incurred in two levels – luxury and non-luxury – but the changes proposed would split the luxury tier in three, making some expensive cars that are priced above $150,000 subject to double the percentage of stamp duty currently payable on a car below the luxury car tax threshold.

• Stamp duty is calculated on the total price of the vehicle – the manufacturer's list price, the GST (10 per cent for goods and services tax) and the LCT (33 per cent for luxury car tax).
• Stamp duty of 4.2 per cent is payable up to the LCT threshold of $66,331.
• Stamp duty of 5.2 per cent is payable for the component of the car's price above the LCT threshold.
• The maximum a buyer will pay up to the LCT threshold is $2786.
• A luxury car priced at $100,000 costs $5200 for stamp duty.

• The luxury car tax threshold rises to $67,525, which would result in a lower purchase price for a car on or just above the previous threshold.
• Stamp duty for non-luxury cars (cars priced below $67,525) will be subject to the same stamp duty rate of 4.2 per cent.
• Non-luxury vehicles purchased after July 1 will cost no more than $2836 in stamp duty – $67,525 multiplied by 4.2 per cent.
• Cars priced above $67,525, but less than $100,000 will be subject to the same stamp duty rate for luxury cars – 5.2 per cent for the whole price, not just the component above the LCT threshold.
• Stamp duty payable for a car priced at exactly $100,000 will total $5200.
• A car priced above $100,000 but below $150,000 will be subject to a stamp duty charge at the rate of seven per cent across the total vehicle price.
• For a Lexus GS350 Sports Luxury costing $106,670.3 precisely, the stamp duty would total $113,215.40 drive-away – including $7476 in stamp duty. That's a difference of $1922.40 from July 1.
• Total stamp duty for a car priced at exactly $150,000 would be $10,500 – 7.0 per cent of the total price.
• In the event a vehicle is priced above $150,000, the stamp duty for that figure is charged at a rate of nine per cent.
• A car priced at $200,000 will incur stamp duty of $18,000 – 9.0 per cent of the total price.
• For a Porsche Cayenne S at a driveaway price of $179,248, stamp duty will be $14,724 – a difference of $5838.
• Used cars, which previously incurred the same stamp duty (4.2% of the purchase price) irrespective of price, will now be brought into line with new cars and subject to the same stamp duty protocol.

• Federal Chamber of Automotive Industries (FCAI). The peak body representing car importers in Australia is arguing that higher costs associated with the purchase of a luxury car will further erode sales in a declining market and hurt the bottom line of its members.
• The Victorian Automobile Chamber of Commerce (VACC) is lobbying on behalf of dealers in Victoria. According to the VACC, dealers are already encountering strong resistance from buyers who have placed orders for luxury cars in good faith, only to learn that by the time the vehicle is delivered in Australia – after being built in Europe, typically, and shipping to Australia – it may cost thousands more in stamp duty if it's delivered after July 1.
• The Australian Automobile Dealer Association (AADA) also represents dealers and has expressed the same sort of concerns that the VACC has. There's talk of the AADA launching a high court appeal to block the Victorian government's implementation of the revised stamp duty regime.

Tax revenue from the sale of high end cars has fallen as the market has declined over the past year. Falling house prices and reduced real estate sales have also eroded Here's what Tim Pallas announced in his budget statement on May 27:

"Motor vehicle taxes are expected to grow by 8.2 per cent to be $2.8 billion in revenue in 2019-20 and grow by an average of 4.2 per cent a year over the forward estimates. Stamp duty revenue from new vehicle sales continues to be weak in the first half of 2018-19, likely reflecting more cautious consumer spending behaviour in response to easing dwelling prices. Despite this, strong population growth and new policy decisions are contributing to upgrades to motor vehicle stamp duty revenue from 2019-20.

"From 1 July 2019, motor vehicle duty for used passenger motor vehicles valued above the luxury threshold will be aligned with the rate for new cars, ensuring consistent treatment of new and used cars regardless of value.

"In addition, two new super-luxury thresholds will be introduced from 1 July 2019. All passenger motor vehicles valued between $100 001 and $150 000 will be charged a motor vehicle duty of $14.00 per $200 of market value and all passenger motor vehicles valued above $150 001 will be charged a motor vehicle duty of $18.00 per $200 of market value.

"All low-emission passenger cars (with carbon dioxide emissions less than 120g/km) and cars owned by primary producers used in the business of primary production will be exempt from the existing and new luxury car duty rates. This will result in a reduced duty rate for all eligible cars valued above the luxury car threshold."

For an accurate stamp duty figure for your new car, here's the Victorian State Revenue Office's stamp duty calculator.