• Examples – working out the GST and LCT

    GST and LCT for a luxury vehicle that includes an MVIP

    The following example shows how the dealer calculates GST and LCT for a luxury vehicle that includes an MVIP.

    Example 3: Working out the LCT and GST payable

    In February 2015, Matty Bee Motors (MBM) sold a non-fuel-efficient luxury motor vehicle for $77,500, plus GST and LCT. This price did not include stamp duty, registration, extended warranty or compulsory third party insurance.

    The manufacturer gave MBM a third party MVIP of $2,000 (MBM will include it in their activity statement as part of the vehicle sale and pay GST on this amount).

    To work out the total consideration for the vehicle, MBM Motors added together the amount paid by the customer and the amount paid by the manufacturer, which is
    $77,500 + $2,000 = $79,500

    The total luxury motor vehicle value is used to work out if the price of the vehicle (including GST) is higher than the LCT threshold. The LCT threshold for non-fuel efficient vehicles was $61,884 in 2014–15. To work this out, MBM Motors adds the GST to the total consideration, which is:
    $79,500 + ($79,500 x 10/100) = $87,450

    MBM works out the amount of LCT as follows:

    (LCT value – LCT threshold) x 10/11 x 33%

    ($87,450 – $61,884) x 10/11 x 33%

    $25,566 x 10/11 x 33%

    $23,242 x 33%

    The LCT payable is $7,669.

    In summary, the sale was for a total of $95,119, including: $79,500 (pre tax), plus GST of $7,950 plus LCT of $7,669.

    When MBM completes its monthly activity statement it reports GST of $7,950, which includes the GST collected from the customer plus GST for the MVIP. It also reports its LCT liability of $7,669.

    End of example

    GST and LCT payable when a luxury motor vehicle has an all-inclusive retail price

    The following example shows how the dealer works out the LCT and GST payable when a luxury motor vehicle has an all-inclusive retail price.

    Example 4

    In February 2015, Matty Bee Motors (MBM) sold a luxury motor vehicle that is not a fuel-efficient vehicle, for an all-inclusive retail price of $93,017 including GST and LCT. This price did not include stamp duty, registration, extended warranty or compulsory third party insurance.

    The manufacturer gave MBM a third party MVIP of $2,000. GST and LCT is worked out on the all-inclusive price, which is $95,017 ($93,017 + $2,000).

    Work out the amount of LCT

    MBM takes out the GST and LCT payable from the amount above the LCT threshold.

    = (all-inclusive price – LCT threshold) / 1.43*

    = ($95,017 - $61,884) / 1.43

    = $23,169

    *1.43 represents cumulatively the GST at 10% and LCT at 33%

    MBM then works out the LCT payable:

    = $23,169 x 33%

    = $7,646

    Work out the amount of GST in the all-inclusive price

    MBM first works out the LCT value, which is usually the GST inclusive price of the vehicle:

    = (all-inclusive price – LCT payable on the sale) x 1/11

    = ($95,017 – $7,646) x 1/11

    = $87,371 x 1/11

    = $7,942

    The total consideration of $95,017 includes $7,646 LCT and $7,942 GST.

    The LCT amount of $7,646 represents the total LCT payable on both the MVIP and the amount paid by the customer to the dealer.

    End of example
      Last modified: 06 Jun 2016QC 49280