The luxury car tax threshold has been bumped for the new financial year, going from $67,525 to $68,740, and from $75,526 to $77,565 for fuel-efficient vehicles.
Update: The luxury car tax threshold has been bumped again for the 2021-22 financial year.
'Fuel-efficient' vehicles in the Australian Taxation Office's (ATO) eyes are vehicles that consume less than seven litres of fuel per 100km.
This represents the first time in five financial years the threshold has been bumped for such vehicles.
For any vehicles with remaining values over these thresholds, there is an applicable tax of 33% and was originally designed to make locally-produced cars more attractive to buy.
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Lender | Advertised rate | Comparison rate | Monthly repayment | Interest Type | Vehicle Type | Maximum Vehicle Age | Ongoing Fee | Application Fee | Total Repayment | Early Repayment | Instant Approval | Online Application | |
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Fixed Car Loan (with Low Emission Vehicle discount) | |||||||||||||
Base criteria: fixed and secured car loans for 'low emission' cars. Data accurate as at 01 September 2020. Rates based on a loan of $30,000 for a five-year loan term. Products sorted by advertised rate. Repayments are calculated based on advertised rates. Rates correct as of October 26, 2021. View disclaimer.
In February, when Holden ceased rolling out vehicles altogether, there were calls to scrap the tax entirely.
Nationals senator Matt Canavan said at the time the tax unfairly targets farmers and small business owners.
“Many farmers have to buy vehicles that are above that threshold to operate their business,” Senator Canavan told the Nine Network.
“That sort of cost on our farms particularly when facing a drought, that’s something that should be looked at first in my view.”
Read: What is the luxury car tax (LCT)?
The Federal Chamber of Automotive Industries' (FCAI) chief Tony Weber has previously said the tax is "money grabbing at its worst".
“The LCT actually penalises Australian consumers as it imposes unnecessary additional taxes on many vehicles which can in no way be described as luxury," he said in May 2019.
"The majority of people who pay the tax are average Australians who buy vehicles well under $100,000 to transport their families.
“The EU regards it as a false tariff and there is no doubt that it is a tax on technology and safety, preventing consumers from accessing the newest and safest vehicles."
In 2019, Car Advice found Toyota customers paid the most LCT compared to customers of other brands.
When looking at the 2020 Toyota Landcruiser GX manual utility, for example, the price guide is $68,590 (before on-road costs such as stamp duty and the LCT).
As the vehicle is now within the threshold, there is no LCT applicable, potentially saving buyers up to $351.
Photo by Hunter Newton on Unsplash
