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  • Trends and latest findings

    The net luxury car tax (LCT) gap estimate has ranged between 3.4% and 10.1% over the six-year period from 2013–14 to 2018–19 and the current net gap estimate is again within this range. Small changes (increases and decreases) in the gap estimate are more likely the statistical noise that is a feature of any statistical estimation process, rather than signalling any real underlying change in compliance.

    Table 1: Luxury car tax gap, 2013–14 to 2018–19

    Element

    2013–14

    2014–15

    2015–16

    2016–17

    2017–18

    2018–19

    Population

    2,039

    2,049

    2,095

    2,096

    2,068

    2,155

    Gross gap ($m)

    49

    26

    74

    50

    80

    78

    Amendments ($m)

    9.6

    7.6

    5.4

    8.2

    21.0

    12.4

    Net gap ($m)

    40

    18

    69

    42

    58

    66

    Tax paid ($m)

    453

    523

    610

    675

    688

    666

    Theoretical liability ($m)

    493

    541

    678

    716

    746

    732

    Gross gap (%)

    10.0

    4.8

    10.9

    6.9

    10.7

    10.7

    Net gap (%)

    8.1

    3.4

    10.1

    5.8

    7.8

    9.0

    Figure 1 shows the trend in the gross and net tax gap estimate over the same period.

    Figure 1: Gross and net luxury car tax gap (percentage), 2013–14 to 2018–19


    Figure 1 shows the gross and net gap in percentage terms, as outlined in Table 1.

    We see significant changes in this gap from year-to-year. Our analysis suggests that the size of the gap is sensitive to movements in macroeconomic factors, such as the exchange rate. The majority of vehicles subjected to LCT between 2013–14 and 2018–19 were imported. When the Australian dollar was weaker and luxury cars became more expensive, there appeared to be more estimated non-compliance in relative terms.

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      Last modified: 19 Oct 2021QC 64036