When you sell a luxury car in Australia it's subject to LCT if you sell it in the course of your business and you're registered or required to be registered for GST.
LCT applies in all of the following cases:
- A dealer sells a car to an individual or business and the car passes from the manufacturer (or importer) to the finance company, then to the dealership, then to the end customer – each stage is regarded as a separate sale.
- A dealer, wholesaler, manufacturer or importer provides a luxury car to an employee, associate or member of the same GST group or GST joint venture.
- A car is sold to a Commonwealth, state or territory department, agency or statutory authority (other than when used as an emergency vehicle).
- A car that is a capital asset of a business is sold or traded in.
- An endorsed public institution sells a car that is a work of art or a collectors piece and the buyer is not an endorsed public institution.
You must pay LCT if you provide a luxury car to an employee (either as a bonus or as part of a salary package) or associate.
If you sell a luxury car to your employee, associate or an employee of your associate for less than the market value, or give it to them, the LCT value of the car is its GST-inclusive market value, excluding any LCT payable.
(Associates include people and entities closely associated with you, such as relatives and closely connected companies or trusts. A partner in a partnership is an associate of the partnership.)
If you’re a member of a GST group and provide a luxury car to another member of your GST group the LCT liability is payable by the GST representative member.
If you’re a participant in a GST joint venture and you provide a luxury car to another participant in the GST joint venture the LCT liability is payable by the joint venture operator.
If you're an endorsed public institution (a museum, gallery or library that is registered for GST and endorsed as a deductible gift recipient), LCT applies when both of the following apply:
- You purchase a luxury car locally that is a work of art or a collectors piece for the sole purpose of public display.
- You sell that luxury car to an entity that is not an endorsed public institution.
See alsoA luxury car is subject to LCT if you sell it in the course of your business, and you're registered or required to be registered for GST.