Find out how to calculate the luxury car tax that is payable on a vehicle.
A Luxury Car Tax (LCT) calculator allows you to figure out how much LCT is included in the overall price of the car or how much LCT is payable on the car. Luxury car tax is a tax that is charged to you when you purchase a car that meets certain criteria that deem it a "luxury" vehicle. You can also use LCT to work out how much is included in the overall price of a car.
What is luxury car tax?
When you buy a vehicle that is above a certain dollar value, you will be charged a tax. This is called the luxury car tax. The thresholds for this tax, detailed in the table below, change each year and are different for fuel efficient and non-fuel efficient vehicles. LCT is imposed at the rate of 33% on the amount above the luxury car threshold and is paid by businesses that sell or import luxury cars and individuals who import them.
Luxury car tax rates and thresholds
This guide shows the price thresholds of luxury vehicles. Depending on what function you’re using, the price will include the gross sales tax and the luxury car tax. You’ll then have to select whether or not the car meets the luxury car fuel-efficient requirements (a combined cycle fuel consumption of less than seven litres per 100 kilometres).
|Financial Year||Fuel efficient vehicles(fuel consumption of 7L/100km or less)||Other vehicles|
How to calculate your luxury car tax
Calculating your luxury car tax is relatively simple. To start, you need to determine the LCT value of the car, which includes what you paid for the car including GST, customs duties and any other costs at the time of the import. You then subtract the LCT threshold. You can check the threshold for the applicable year using the table above. Then use the following formula:
(LCT value – LCT threshold) x 10/11 x 33/100 = LCT amount
To see an example of how to use this formula, take a look at the case study below.
Janice is looking to buy a luxury car to replace her old vehicle. She knows the price but wants to see how much the LCT payable on the vehicle will be. To properly do this, she works out how much LCT she will need to pay. For the year 2015/16 the LCT threshold was $63,184 for fuel efficient vehicles. The car she is looking to purchase is $88,00 including GST.
She uses the formula to determine her LCT: ($88,000 - $63,000) x 10/11 x 33/100
In her case, the price of the vehicle, including the gross sales tax but excluding the luxury car tax, is $88,000 and it does meet the fuel efficiency criteria. According to the calculator, the LCT rate is 33% and the LCT payable on the vehicle is $7,444.
Frequently asked questions
I've already paid luxury car tax on my vehicle and I'm selling my car. Do I need to pay it again?
If the vehicle you're selling is less than two years old and the car has already been subject to LCT, you may need to pay it again if the car has increased in value. The LCT payable will decrease by the amount you previously paid.
I'm purchasing a vehicle that was imported one and a half years ago. Do I still need to pay LCT?
Yes. LCT applies is only waived for vehicles imported two or more years before.
I want to start a business selling luxury cars. What do I need to do in regards to LCT?
Before paying for luxury car tax, you need to be registered for GST and LCT. Your GST registration needs to be processed before registering for LCT.
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