PSA: Luxury Car Tax Threshold Increasing by $5101 on July 1 ($4416 for Fuel Efficient Vehicles)

spackbace on 31/05/2023 - 12:22
Last edited 31/05/2023 - 12:24 by 1 other user

https://www.ato.gov.au/Rates/Luxury-car-tax-rate-and-thresho…

Largest jump for fuel cars since it's inception. This will mean that should you have a car on order that goes over that amount, the price you pay will reduce by $1700.33 ($1472 for fuel efficient vehicles). So unless you need to for tax reasons, don't get it licensed until the next FY.

(Though let's be honest, the threshold should be much higher than that, or LCT should be totally abolished given we have no local car manufacturing to 'protect')

Automotive

Comments

  • coffeeinmyveins on 31/05/2023 - 12:38
    +2

    LCT should be totally abolished given we have no local car manufacturing to 'protect'

    And this is why any tax or fee that is imposed for one reason will always be there and people need to be more aware of it. Stamp duty is the same. Why would the gov want to give up what they've already gotten?

  • FoxJump on 31/05/2023 - 12:43
    +1

    If local car manufacturing still existed, would LCT apply to cars sold by that manufacturer over the threshold?

    • Brick Tamland on 31/05/2023 - 12:53
      +1

      Yes it would.

      LCT was introduced to replace the abolishment of wholesale tax. Nothing to do with protecting the local manufacturing industry. Tariffs, quotas and import taxes protected local manufacturing.

      • dtc on 31/05/2023 - 13:18
        +2

        It was partly abolishment of the wholesale tax and partly the introduction of the GST (which happened at the same time and the former was a consequence of the latter).

        it was when Treasury and the politicians of the day realised that there would be a significant reduction in the price of expensive cars because the removed wholesale/sales tax was higher than the added GST. And not wanting to have complaints about why Porsche et al when down in price while food and shoes and other essentials went up in price, the LCT was thought up and justified as protecting local industry (despite (a) no other local industry getting the same treatment and (b) this being done by the Liberal party who couldnt care less about the highly unionised car industry)

        Saw an article where one of the Treasury officials said that, in hindsight, they should have imposed an LCT on luxury boats as well; just that no one thought about boats because no one in the team had one.

        End of the day the LCT is an entirely avoidable tax outside of a very few niche requirements (such as a very serious 4WD or, perhaps less niche other than in a wallet sense, some of the EVs). For most people there are entirely suitable options below the LCT threshold.

        • Brick Tamland on 31/05/2023 - 13:27

          the LCT was thought up and justified as protecting local industry (despite (a) no other local industry getting the same treatment and (b) this being done by the Liberal party who couldnt care less about the highly unionised car industry)

          Interesting, I've always wondered where this 'protecting local industry' came from as the policy doesnt actually give local industry any exemption of favourable treatment. I've only ever seen this local industry thing used to justify unwinding it after local industry stopped and its never logically made any sense.

          • spackbace on 31/05/2023 - 13:49

            @Brick Tamland: Maybe because no local cars were priced more than the LCT threshold? Most expensive was a top of the range Commodore wagon at $59,190 plus ORC in 2017. Notice the threshold was around $65k back then

            • Brick Tamland on 31/05/2023 - 14:06

              @spackbace: Nearly every HSV would have copped LCT. Most recently the w1 would have had a chunky LCT bill.

              • spackbace on 31/05/2023 - 14:08

                @Brick Tamland: Hmm true, though low numbers

                FYI if you google it, you'll find a few references to ppl saying the tax was only brought in to help local car manufacturers:
                https://www.drive.com.au/news/luxury-car-tax-industry-mps-re…

                The tax was first implemented by the Howard government in 2000 in a bid to protect local manufacturing, and was increased to its current rate of 33 per cent by the Rudd government in 2008.

                • Brick Tamland on 31/05/2023 - 14:49
                  +2

                  @spackbace: same website different explanation. haha

                  In order to minimise the shortfall in tax revenue when shifting from the higher WST rate to the lower GST rate, the government decided to introduce a luxury car tax of 25 per cent applicable to vehicles over a threshold of around $55,000.

                  https://www.drive.com.au/news/luxury-car-tax-four-things-you…

                  To me this seems the more plausible reason for LCT. If there was a different threshold for local vs imports or a different rate then I'd have a different opinion but there is nothing in LCT that sets out a more favourable treatment to local makers.

  • PinzVidz on 31/05/2023 - 12:46
    +2

    LC300 buyers still won't be happy. They just need to do it the OzB way, buy bare vehicle first, fit all the genuine accessories at the first service. Avoid stamps and LCT on accessories. :)

  • Brick Tamland on 31/05/2023 - 12:54

    LCT applies on compliance date not licence date or registration date

    • spackbace on 31/05/2023 - 13:00
      +2

      I beg to differ

      The following table lists the LCT thresholds for the financial year the car was imported, acquired or sold.

      Generally its that last word which is applicable.

      Compliance date only comes into it for up to 2 years from purchase. Those used cars which are priced more than new? Yeah you're paying extra LCT on the price difference from new, for up to a 2yo car.

      • Brick Tamland on 31/05/2023 - 13:08

        LCT applies to sales of cars that are two years old or less. A car is more than two years old at the time of supply if it was manufactured locally or imported more than two years previously. https://www.ato.gov.au/Business/Luxury-car-tax/When-LCT-appl…

        The legislation:

        A NEW TAX SYSTEM (LUXURY CAR TAX) ACT 1999 - SECT 7.5

        Liability for luxury car tax on taxable importations
        You must pay the luxury car tax payable on any taxable importation of a luxury car that you make.

        Bolded for emphasis.

        • spackbace on 31/05/2023 - 13:10

          That doesn't state which threshold is applicable, however…

          • Brick Tamland on 31/05/2023 - 13:12
            +1

            @spackbace: ah right yes. My bad there, yes the new threshold will apply on the sold date

          • Brick Tamland on 31/05/2023 - 13:40
            +1

            @spackbace: I’d add to that and suggest that even if you have fully paid for the car already but delay the pickup (delivery) of the car you could get a refund on some of that LCT.

  • Seraphin7 on 31/05/2023 - 13:02

    Of course LCT should be abolished (should never have been implemented in the first place).

    Consider what it was there for … we had a local car manufacturing industry that was so woefully non-competitive on a global scale to the extent that our "normal cars" couldn't compete with the rest of the world's "luxury cars" without having a stoinking great tax added to them.

    And even then, they progressively went out of business, but the tax still remains on vehicles that are actually far from "luxury" in the true sense.

    • Brick Tamland on 31/05/2023 - 13:15
      +1

      I dont think our normal cars were ever competing against international luxury cars. The impossible choice of either choosing the Porsche 911 or the Torana

      • Seraphin7 on 31/05/2023 - 13:20

        The point is the threshold at which the LCT kicked in was ridiculously low. I remember way back in day it had an uncanny correlation with the price of a BMW 318i. No one (other than the Australian Government) would describe a low end BMW as a "luxury" vehicle.

        • Brick Tamland on 31/05/2023 - 13:24
          +2

          No one (other than the Australian Government) would describe a low end BMW as a "luxury" vehicle.

          I think alot of BMW buyers and probably BMW would disagree.

          • Seraphin7 on 31/05/2023 - 13:33
            +2

            @Brick Tamland:

            No one (other than the Australian Government and low end BMW owners) would describe a low end BMW as a "luxury" vehicle.

            FTFM.

        • dukeGR4 on 07/06/2023 - 14:43

          to be fair, other D-segment of that time ie. Accord and Camry were super pov. of course a 3-series is going to be a luxury car.

          having said that the latest G-series BMW 3er is a luxury car, it's quite close in length when compared to the E39 5-series. in G80 guise, it's only 40cm shorter than the E60.

  • lachhelix on 31/05/2023 - 13:11

    Ah yes, the old LCT - another rubbish government tax

  • techno2000 on 31/05/2023 - 16:03

    Even the new figure of $76,950 is ridiculously low. I think the top model of Toyota Kluger which is hardly a luxury vehicle exceeds that.

    Prices of vehicles post covid have increased tremendously.

    My RAv4 Hybrid 2 WD came at $44000 driveaway in 2019 and I bought for $47000 in 2021 and now selling for $52000

    Similar to Medicare Levy Surcharge family income threshold being $180,000 in 2015 and only now being increased just a bit to $186,000

    So if a family earns more than $186,000 in 2023,they are rich. Really?

    • spackbace on 31/05/2023 - 16:39

      Bear in mind that the threshold is before ORC, so the hybrid Kluger is already below the threshold (for fuel efficient vehicles), and 2.4T Grande AWD will now fall under the threshold

      But yes, the threshold should be pushed higher (or abolished), this has been argued for years

    • Keplaffintech on 31/05/2023 - 19:25
      +1

      A top model Kluger may not be a 'luxury car' from a car reviewers perspective, but it is a luxury - no one needs that sort of car, it's just a luxury to have one.

      • coffeeinmyveins on 31/05/2023 - 22:08

        Luxury is an Audi rsq7 not a bloody Toyota

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