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  • Exemption from luxury car tax

    For cars with a GST-inclusive value over the luxury car tax (LCT) threshold, an LCT rate of 33% is applied.

    To work out the GST-inclusive value of the car, include the value of any parts, accessories or attachments supplied or imported at the same time as the car.

    If you are an eligible veteran or person with disability and buy a car to drive or be driven in that is:

    • not modified, you must pay GST on the value above the car limit and LCT on the value above the LCT threshold
    • modified, you must pay GST on the value above the car limit and LCT on the value above the LCT threshold, but you do not pay GST or LCT on the value of the modifications
    • specifically fitted out for transporting a person with a disability seated in a wheelchair, it is not a luxury car and is not subject to LCT – however, if the car is GST-free under GST law, then LCT will apply. Complete a Declaration for an exemption from luxury car tax – cars used for transporting people with a disability in wheelchairs and present it to your motor vehicle supplier at or before the time of supply.

    See also:

    Example 1: Car not subject to LCT as it is specifically fitted out

    Carole pays $75,000 for a car that is specifically fitted out for transporting a person in a wheelchair. She plans to use it to transport her friend. Because Carole is not a veteran or person with disability, she must pay GST on the car. However, Carole will not have to pay LCT because even though the value of the car exceeds the LCT threshold, it is not classed as a luxury car because it is specifically fitted out for transporting a person with a disability seated in a wheelchair.

    End of example

     

    Example 2: Unmodified car is subject to LCT

    Evan is an eligible veteran with a disability and buys a car for $75,000. He plans to use it for his own transport of over 40,000 kilometres. The car is GST-free up to the car limit. GST will apply to the value of the car above the car limit, and LCT will be payable on the value of the car above the LCT threshold.

    End of example

     

    Example 3: Car with modifications is GST-free

    Matthew has a current disability certificate and wants to buy a new car for travel to and from paid work for at least the next two years. The normal purchase price of the car, including GST, is $55,000 (the GST-inclusive market value), which is under the LCT threshold of $65,094 for the 2017–18 financial year.

    Matthew asks the dealer to modify the car by adding hand controls so that he can drive it. These modifications add $25,000 (exclusive of GST) to the purchase price of the car.

    The sale of the car, with modifications, to Matthew is GST-free and LCT-free.

    In working out the GST and LCT value of the car, you do not include the price of modifications made solely to enable the car to be driven by a person with a disability, or to transport a person with a disability.

    Matthew will have to pay the GST-exclusive price of the car, plus the price of the modifications:

    = $50,000 (GST-exclusive price) + $25,000 (the price of the modifications excluding GST and LCT)

    = $75,000.

    End of example

     

    Example 4: LCT and GST payable when the price of the car is over the car limit

    In December 2017, Mary wanted to buy a new luxury car for travel to and from paid work for at least the next two years. She was eligible for tax concessions due to her physical disability. The car was valued at $80,000 without GST or LCT. The sale of the car to Mary was GST-free only on the value up to the car limit. The value above the car limit was subject to GST and the value above the LCT threshold was also subject to LCT.

    1. Calculate the LCT value:

    Value of the car + (notional) GST
    = $80,000 + (10% of $80,000)
    = $80,000 + $8,000
    = $88,000

    2. Calculate the amount that is above the LCT threshold. In the 2017–18 tax year the LCT threshold was $65,094:

    LCT value − LCT threshold
    = $88,000 − $65,094
    = $22,906

    3. Exclude the GST included in the amount above the LCT threshold:

    = $22,906 × 10 ÷ 11
    = $20,823.64

    4. Calculate the GST payable on the amount above the car limit. She is purchasing the car in the 2017–18 tax year, so the car limit is $57,581:

    = ($88,000 − $57,581) ÷ 11
    = $30,419 ÷ 11
    = $2,765.36

    5. Calculate the luxury car tax payable (which is 33% of the amount above the LCT threshold, less GST):

    = $20,823.64 × 33%
    = $6,871.80

    6. Calculate the total amount Mary needs to pay:

    Value of the car + GST + LCT
    = $80,000 + $2,765.36 + $6,871.80
    = $89,637.16

    End of example
    Last modified: 29 Jun 2018QC 33254