Luxury car tax thresholds increased
ATO ups LCT thresholds by a record amount for the new financial year, potentially saving buyers thousandsThe federal government will raise its luxury car tax (LCT) thresholds from July, potentially saving many Australians thousands on the purchase of new vehicles priced over about $75,000.
As part of the Albanese government’s 2023-2024 federal budget, from July 1 the standard LCT threshold will be raised from $71,849 to $76,950, and the LCT threshold for ‘fuel efficient’ vehicles will increase $84,916 to $89,332.
Marking some of the biggest threshold moves since the controversial LCT was introduced by the Howard government in 2001, the exact increases are $4415 for the former and $5101 for the latter, the determining factor of which is combined fuel consumption of less than 7.0L/100km (therefore including EVs).
LCT is applied at a rate of 33 per cent for every dollar over the threshold, so threshold increases are good news for consumers because it reduces the amount of LCT payable for vehicles priced above the threshold and also opens up a broader range of vehicles exempt from the tax.
Models that will be exempt from LCT come July 1 include the Audi S3, Honda Civic Type R, Mazda BT-50 Thunder, Nissan Z, Volkswagen Arteon 206TSI R-Line Shooting Brake, BMW M135i xDrive and most Toyota LandCruiser 70 Series variants.
As for fuel-efficient vehicles, headline LCT exemptions comprise the Hyundai IONIQ 5 and IONIQ 6 AWD Epiq, Mazda CX-60 Azami PHEV, Kia EV6 GT-Line and Volkswagen Touareg 170TDI.
LCT is payable on the proportion of the purchase price (including dealer delivery fee) over the threshold, before the various state-based statutory on-road charges including stamp duty, CTP insurance and registration are added.
So consumers in the market for a $100,000 vehicle – for example – should save $1520 in LCT if they wait until July 1 to purchase their vehicle, while those after a similarly priced fuel-efficient vehicle should pay $1325 less.
But it will be interesting to see whether state or national drive-away prices reduce for newly exempt vehicles and those above the new thresholds, or if auto brands and dealers seek to maximise profits by leaving them unchanged post-July 1.
History of LCT thresholds:
Financial year | Fuel efficient vehicles | Other vehicles |
2023–24 | $89,332 | $76,950 |
2022–23 | $84,916 | $71,849 |
2021–22 | $79,659 | $69,152 |
2020–21 | $77,565 | $68,740 |
2019–20 | $75,526 | $67,525 |
2018–19 | $75,526 | $66,331 |
2017–18 | $75,526 | $65,094 |
2016–17 | $75,526 | $64,132 |
2015–16 | $75,375 | $63,184 |
2014–15 | $75,375 | $61,884 |
2013–14 | $75,375 | $60,316 |
2012–13 | $75,375 | $59,133 |
2011–12 | $75,375 | $57,466 |
Source: ATO
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