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  • Adjustments

    If a change in circumstances after you sell or import a luxury car alters the amount of LCT you needed to pay in an earlier tax period, you must make an adjustment on your next BAS.

    If you are an endorsed public institution (museum, gallery or library that is registered for GST and endorsed as a deductible gift recipient) and you purchased a luxury car locally that is a work of art or collectors piece for the sole purpose of public display, you are entitled to a 'change of use' adjustment on your next BAS.

    An adjustment will increase or decrease the net amount of tax you're liable to pay. Adjustments can be made by the supplier, a registered recipient or a registered importer.

    You must make an adjustment within four years of the relevant supply or importation.

    Note that if you've made a mistake in reporting on your LCT obligations – that is, if the amount you reported on your BAS was not correct at the time you lodged it – you can't correct it on your next BAS. Instead you need to revise the BAS covering the period in which the mistake was made.

    On this page:

    An adjustment event

    An LCT adjustment event occurs when:

    • a sale is cancelled – for example, where you paid LCT on the sale of a car, but you and the purchaser later decided not to go ahead with the sale
    • there is an increase or decrease in the payment you received – for example, where the final agreed price of the car is less than the amount first negotiated and the LCT on the original price was accounted for in an earlier tax period, in which case you’ll need to work out the LCT on the new price and make an adjustment
    • the sale of a luxury car stops being a taxable sale

    See also:

    • Completing the LCT labels

    Change of use adjustments

    You'll need to make:

    • an increasing change of use adjustment if you quoted your ABN to defer your LCT payment on a luxury car, but then used the car for a purpose that is not quotable
    • an increasing change of use adjustment at label 1E on your BAS if you are an endorsed public institution (museum, gallery or library that is registered for GST and endorsed as a deductible gift recipient) and you qualified for the LCT relief on the importation or purchase of a luxury car, but you either
      • used the car for a purpose other than for public display
      • sold the car to an entity other than an endorsed public institution
    • a decreasing adjustment if you didn’t quote your ABN to defer your LCT payment on a luxury car, but you should have because you plan to use – and have only used – the car for a quotable purpose
    • a decreasing adjustment at label 1F on your BAS if you are an endorsed public institution (museum, gallery or library that is registered for GST and endorsed as a deductible gift recipient) and you purchased a luxury car locally that is a work of art or collectors piece for the sole purpose of public display.

    See also:

    Bad debt adjustments

    If you account for GST on a non-cash (accrual) basis, you can account for LCT on the sale of a luxury car before you receive any or all of the payment.

    If you later write-off some or all of the payment due as a bad debt, or if a debt has been overdue for 12 months or more, you'll have a decreasing LCT adjustment because you won't have received all the payment due on the sale.

    If you later recover some or all of the debt, you must make an increasing LCT adjustment in the tax period in which you recovered some or all of the debt – this will increase the amount of LCT you must pay. The adjustment will be the amount of LCT payable on the amount you recovered.

    Last modified: 10 Mar 2017QC 22112