The LCT gap methodology can only be used to estimate the LCT payable amount – the analysis excludes LCT refunds as we currently do not have a suitable benchmark for estimating the correct amount of LCT refund claims. LCT refunds were $7.3 million in 2013–14.
Timing differences occur between the data sets used to estimate the gap:
- Sales data typically reflects the point at which the dealer forwards the retail dealer advice (RDA) to the car maker when invoicing for the sale. The RDA includes owner details, such as name, address and customer type (private or non-private). However, analysing some new models shows that the recorded sale, as reported by VFACTS, can occur either at the point of ordering or at the point of registration.
- Roads authority registration data from the states and territories is based on the date of registration.
- LCT is payable on the BAS when the taxable sale of a luxury car occurs.
The methodology does not allow for transactions in instances where vehicles are 'optioned up' after the sale to avoid paying LCT on the options. In these transactions, the value of the vehicle registered would be lower than the true value of the vehicle.
Sales data does not provide prices of the cars sold and must be compared to other data sets. In many instances, there is not enough detail on the model description to enable the calculation of a highly reliable average price. To counter this problem, we use the VIN chassis number to determine an exact make and model of the car, but it is not comprehensive.