cars, utes

Hansy Mannil Jul 10, 2023

What is Luxury Car Tax?

Luxury Car Tax is a tax that must be paid on new and used vehicles where the total purchase price (including GST, but excluding other government fees and charges) exceeds the Luxury Car Threshold. You will only be required to pay Luxury Car Tax on the amount above the threshold limit.

Bear in mind that the Luxury Car Tax Threshold is subject to change each financial year – you can find this year’s figures here.

When is Luxury Car Tax paid?

Car dealerships will almost always include the Luxury Car Tax in the price quoted.

Primary producers and tourism operators may be able to claim a refund of up to $3,000 on any Luxury Car Tax paid, depending on the type and number of vehicles purchased.

How much Luxury Car Tax do I have to pay? And how is this calculated?

If the total purchase price (including GST, but excluding other government fees and charges) of your car exceeds the Luxury Car Threshold, you’ll need to pay Luxury Car Tax. You’ll pay 33% on the amount that exceeds the Luxury Car Threshold (less GST).

This is calculated using the four following steps:

  1. Calculate the cost of the car (including GST, but excluding government fees and charges, such as stamp duty, registration and compulsory third party insurance)
  2. Subtract the current Luxury Car Tax threshold amount from the car’s price
  3. Divide the figure from step 2 by 1.1 to subtract the GST
  4. Multiply the figure from step 3 by 33% (the Luxury Car Tax rate)                                                                                          

Bear in mind that the amount payable can also vary if you have a “green” car, as the threshold is higher for fuel-efficient vehicles.

To find out exactly how much Luxury Car Tax you’ll need to pay on your new vehicle, use our Luxury Car Tax Calculator.

Are there any exemptions from Luxury Car Tax?

Luxury Car Tax only applies to the purchase of cars that meet a set luxury car criteria.

Vehicle purchases that are exempt from Luxury Car Tax include:

  • Cars with a purchase price below the Luxury Car Tax threshold (including GST, but excluding other government fees and charges)
  • Fuel-efficient "green" cars with a purchase price below the Luxury Car Tax Threshold (including GST and excluding other government fees and charges) for fuel-efficient cars
  • Commercial vehicles that are not primarily designed as passenger vehicles
  • Disabled transport vehicles which have modified for transporting wheelchair passengers

What is the Luxury Car Tax limit for fuel-efficient cars?

You’ll pay less Luxury Car Tax on “green” cars, thanks to a higher Luxury Car Threshold for fuel-efficient vehicles. Cars classed as fuel-efficient have a combined-cycle fuel consumption of 7L per 100km or less as calculated according to the vehicle standards in force under section 7 of the Motor Vehicle Standards Act 1989).

The current Luxury Car Tax limit for fuel-efficient cars can be found here.

Am I eligible for a Luxury Car Tax refund?

You may be able to claim a Luxury Car Tax refund if you are a primary producer or tourism operator.

Refunds apply to the purchase of eligible vehicles (including four-wheel and all-wheel drives) and are capped at $3,000 per vehicle. Primary producers can claim the refund on one eligible vehicle purchase per financial year. Tourism operators can claim the refund on each eligible vehicle purchased.

Luxury Car Tax is paid upfront as part of the vehicle purchase and refunds are then claimed back from the Australian Tax Office.

What is the Luxury Car Tax threshold for Financial Year 2017-2018?

For Financial Year 2017-2018 (FY13), the Luxury Car Tax Threshold has increased to $65,094.

The fuel-efficient "green" car LCT Threshold is $75,526.

These thresholds apply from 1 July 2017 to 30 June 2018.

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