Push to abolish LCT on classic cars

Classic-car buyers and retailers have been left out in the cold by a new amendment to the Luxury Car Tax (LCT) absolving museums, galleries and libraries of the tax for cars on public display.

Individuals importing cars priced above the $64,132 LCT threshold will still incur the tax, unless they can establish that the car was imported with the sole intention of being shown to the public.

Schedule 3 of The Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill 2016 amends the 'A New Tax System (Luxury Car Tax) Act 1999 (LCT Act)' and aims to abolish LCT for public institutions that import or acquire luxury cars for the sole purpose of public display.

Many in the car industry think that is not nearly enough, especially those specialising in classic cars.

Gold Coast classic car dealer Terry Healy late last year wrote a letter to Federal MPs observing that "Classic cars which fall into standard categories of Veteran, Vintage and Classic are not cars which will be used every day and therefore they are not a threat to what is left of the Australian Car Industry, which is what the luxury tax is trying to protect."

According to Healy the amendment is "useless" and does nothing to provide relief for the bulk of people who wish to import valuable classic cars.

He noted that, "Some of my clients treat their cars like art – they are never driven. Even aeroplanes or boats can be imported [without being subject to a luxury tax]".

The rigidity of LCT means that Australians are even missing out on cars that have historical significance down under.

"If a person acquires a car overseas with previous Australian ownership, for example the 1956 Maserati 250F used to win an Australian Grand Prix by Victorian Stan Jones, there is no allowance for previous residency in this country and all taxes are payable. This is not the case in Europe where a National Treasures scheme has an allowance for the repatriation of significant cars with local history or manufacture."

Treasurer Scott Morrison forwarded Healy's letter to Treasury's A/g Division Head, Individuals and Indirect Tax Division, Murray Crowe, for a response.

Crowe replied: "The Government appreciates the cultural value that classic cars can offer to Australia".

But then he simply continued by referring to other law changes largely irrelevant to classic-car LCT, including pending (2018) changes to the Motor Vehicle Standards Act 1989. Those changes will permit importation of used vehicles more than 25 years old (without undergoing expensive modifications under the current RAWS scheme) and they also abolish the $12,000 tariff on privately imported cars less than 12 months old.

MPs James Patterson and John Alexander both responded to Healy's letter in the positive, Patterson saying: "You make some very reasonable points. Personally, I think the rationale for a luxury car tax at all is weaker than it ever has been, but I see your point of view that it has particularly negatively affected classic car owners".

Meanwhile, the Federal government is due to make an announcement soon on future vehicle emissions policy, which in part may include abolishing LCT on green vehicles.
Picture of Jaguar XK150 courtesy of Gnangarra/Wikimedia Commons