The Australian Tax Office has revised the Luxury Car Tax (LCT) threshold, from $66,331 to $67,525 for the 2019-20 financial year. For fuel-efficient vehicles the LCT threshold remains the same at $75,526.
In the past decade, the threshold for non-fuel-efficient vehicles has increased by more than $10,000, from $57,180. In the same period, the threshold for fuel-efficient vehicles has risen by just $526, which seems odd given the environmental benefits of incentivising the take-up of fuel-efficient vehicle.

A fuel-efficient vehicle is defined as one with a fuel consumption of 7L/100 km or less. 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 (Dealers), and also by individuals who import luxury cars.

The LCT threshold increase has resulted in price reductions across many new models. The new threshold makes for a saving of about $400 per vehicle, or $672 for fuel-efficient models.

Although not all savings were passed on to new-car buyers, prices were reduced on models from Audi, Jaguar, Land Rover, Mercedes-Benz, and Porsche, as well as some Lexus vehicles, the Ford Mustang GT and R-Spec, and the Toyota Supra.

Unlike its competitors, BMW is not passing-on the savings to consumers. In a statement, the company said: “BMW integrated the savings from this change into its recent pricing revision for applicable models”.

In Victoria, an additional ‘super luxury duty’ applies above the LCT threshold, equating to 5.2% up to $100,000, 7% from $100,000 to $150,000, and 9% for vehicles over $150,000.

AADA’s position remains that LCT should be abolished.

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