Luxury Car Tax (LCT)
From 1 July 2000, wholesale sales tax (WST) on cars was abolished and replaced by the GST. The luxury car tax (LCT) is designed to ensure that buyers of luxury cars continue to pay more tax than buyers of cars priced under the luxury car tax threshold. The following information is an excerpt from the complete description of LCT available from the Australian Tax Office website and was current as of 18 July 2000. For further detail, please see http://www.ato.gov.au/nonprofit/content.asp?doc=/content/13288.htm.
What is LCT ?
From 1 July 2000, the 45 per cent WST on luxury cars was replaced by a 25 per cent LCT. This is in addition to any GST payable on luxury cars. LCT will ensure that the price of luxury cars falls by about the same amount as the price of cars just under the LCT threshold. In general, LCT will be paid when a car is sold or imported at the retail level.
What is the LCT threshold ?
The LCT threshold is a GST-inclusive value, equal to the car depreciation limit. For the 2000-2001 financial year the LCT threshold is $55,134.
What cars are subject to LCT ?
Cars with a GST-inclusive value above the LCT threshold will be subject to LCT.
The term 'car' includes passenger vehicles designed to carry a load of less than two tonnes and fewer than nine passengers, including station wagons, four-wheel drive vehicles, and all limousines, regardless of their passenger carrying capacity.
In general, the LCT value of a car includes the value of any parts, accessories or attachments supplied or imported at the same time as the car.
What cars are not subject to LCT ?
Luxury car tax does not apply to a car above the LCT threshold if:
o It was sold by a retail sale in Australia before 1 July 2000
o It was imported into Australia before 1 July 2000 and nobody was entitled to quote for sales tax purposes
o There was an application to own use (AOU) of the car before 1 July 2000 for sales tax purposes, and a special credit under section 16 of the GST Transition Act does not apply
o The date of the supply of the car is more than two years after the date of the car's local manufacture or date of entry for home consumption
o It is a prescribed emergency vehicle
o It is not GST-free and is specially fitted out for transporting disabled people seated in wheelchairs
o It is a motor home or campervan
o It is a commercial vehicle that is not designed for the principal purpose of carrying passengers
LCT does not apply to a private sale of a luxury car.
Is LCT payable on the full value of the car ?
No. LCT will apply when a car' s GST-inclusive value exceeds the LCT threshold. LCT is only payable on the GST-exclusive value above the threshold.
Who pays LCT ?
When entities such as retailers, wholesalers and manufacturers make a taxable supply of a luxury car, they will pay LCT. Importers (including private buyers) who make a taxable importation of a luxury car will also pay LCT.
When is LCT payable ?
LCT is payable on all taxable supplies or taxable importations of luxury cars unless the recipient of the car provides a quote, in the prescribed form, to the supplier or to Customs. The quotation system is designed to prevent LCT becoming payable before the car is sold or imported at the retail level.
How is LCT calculated ?
See the examples at http://www.ato.gov.au/nonprofit/content.asp?doc=/content/13288.htm
Need more information ?
Contact the business Tax Reform Infoline on 13 24 78, download information from the web site at http://www.ato.gov.au/ or phone the Customs Information Centre on 1300 363 263
What is LCT ?
From 1 July 2000, the 45 per cent WST on luxury cars was replaced by a 25 per cent LCT. This is in addition to any GST payable on luxury cars. LCT will ensure that the price of luxury cars falls by about the same amount as the price of cars just under the LCT threshold. In general, LCT will be paid when a car is sold or imported at the retail level.
What is the LCT threshold ?
The LCT threshold is a GST-inclusive value, equal to the car depreciation limit. For the 2000-2001 financial year the LCT threshold is $55,134.
What cars are subject to LCT ?
Cars with a GST-inclusive value above the LCT threshold will be subject to LCT.
The term 'car' includes passenger vehicles designed to carry a load of less than two tonnes and fewer than nine passengers, including station wagons, four-wheel drive vehicles, and all limousines, regardless of their passenger carrying capacity.
In general, the LCT value of a car includes the value of any parts, accessories or attachments supplied or imported at the same time as the car.
What cars are not subject to LCT ?
Luxury car tax does not apply to a car above the LCT threshold if:
o It was sold by a retail sale in Australia before 1 July 2000
o It was imported into Australia before 1 July 2000 and nobody was entitled to quote for sales tax purposes
o There was an application to own use (AOU) of the car before 1 July 2000 for sales tax purposes, and a special credit under section 16 of the GST Transition Act does not apply
o The date of the supply of the car is more than two years after the date of the car's local manufacture or date of entry for home consumption
o It is a prescribed emergency vehicle
o It is not GST-free and is specially fitted out for transporting disabled people seated in wheelchairs
o It is a motor home or campervan
o It is a commercial vehicle that is not designed for the principal purpose of carrying passengers
LCT does not apply to a private sale of a luxury car.
Is LCT payable on the full value of the car ?
No. LCT will apply when a car' s GST-inclusive value exceeds the LCT threshold. LCT is only payable on the GST-exclusive value above the threshold.
Who pays LCT ?
When entities such as retailers, wholesalers and manufacturers make a taxable supply of a luxury car, they will pay LCT. Importers (including private buyers) who make a taxable importation of a luxury car will also pay LCT.
When is LCT payable ?
LCT is payable on all taxable supplies or taxable importations of luxury cars unless the recipient of the car provides a quote, in the prescribed form, to the supplier or to Customs. The quotation system is designed to prevent LCT becoming payable before the car is sold or imported at the retail level.
How is LCT calculated ?
See the examples at http://www.ato.gov.au/nonprofit/content.asp?doc=/content/13288.htm
Need more information ?
Contact the business Tax Reform Infoline on 13 24 78, download information from the web site at http://www.ato.gov.au/ or phone the Customs Information Centre on 1300 363 263