FAQ: What effect does Luxury Car Tax (LCT) have on a Novated Lease?

What effect does Luxury Car Tax (LCT) have on a Novated Lease?

Vehicles with a purchase price greater than theLuxury Car Tax Limit attract Luxury Car Tax (LCT) in addition to GST. Luxury Car Tax (LCT) is included in the total cost of the vehicle and therefore influences your monthly payment under a Novated Lease.

Additionally, the Luxury Car Tax Limit determines the maximum Input Tax Credit claimable by the finance company when your vehicle is purchased. This means that if you salary package a vehicle that costs more the Luxury Car Tax Limit, you will not receive a credit for all of the GST included in the vehicle's price. 

Leasing a luxury vehicle has a range of tax implications and should be discussed with your financial adviser or accountant.

To see how LCT affects a Novated Lease in practice, click here to get a Novated Lease quote.