If you’re looking to upgrade your ride to something that’ll turn heads, or just want to be more eco-friendly, there’s some good news – a new tax change could help make it happen.
Have you heard about the luxury car tax (LCT) threshold new car owners pay for affording a high-end vehicle?
If not, if you buy an imported car with a GST-inclusive value above the LCT thresholds, the tax man slugs you with an extra 33% tax on the exceeded amount (minus the GST component).
The good news is that the LCT thresholds have been increased again – the third time in a row.
From July 1, the minimum amount has increased by $5,257 to $84,916 for fuel-efficient vehicles and by $2,697 to $71,849 for other regular vehicles (all inc. GST).
How the LCT threshold works and what it means for you
The increased LCT threshold boost isn’t just good for people wanting to buy a vehicle under the threshold. It will also make cars above the threshold more affordable, too!
Here is a scenario.
Let’s pretend you want to buy a Tesla Model 3 Performance with a GST-inclusive price of $93,325.
Under last financial year’s LCT threshold of $79,659 for fuel-efficient vehicles, you would have paid an LCT tax of $4,100 (exceeds LCT threshold by $13,666, subtract GST component paid, multiply by 33% = $4,100 LCT).
But now that the LCT threshold for fuel-efficient vehicles has been boosted to $84,916, you would only pay an LCT of $2522 ($8,409 – GST component paid x 33% = $2522).
And if you wanted to avoid paying the LCT altogether, you could instead purchase a Model 3 Long Range, which has a GST-inclusive price of $81,725.
That means this financial year, it’s below the LCT threshold, but last year you would have been slugged with an LCT of $620.
Explore your finance options for your luxury vehicle with Broad Finance
If you have your heart set on a certain car – whether it’s a luxury model or not – give us a call today to explore your financing options. We can help you find the right loan for your circumstances, whether the vehicle is for business, personal use, or a combination of the two!
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