Luxury Car Tax
If the Asset Type in the Depreciable Items table is set to «Luxury
Car» or «Luxury Car (Fuel Efficient)»,
luxury car tax (LCT) will apply to
the equipment (subject to the rules below). A lease involving these equipment
types will be treated as a sale-and-loan for income tax purposes.
The amount of ITC is limited to 1 / 11 ×
Luxury Car Depreciation Limit (Section 69 of the GST Act) for the Financier in
leases, and for the Hirer in hire purchases.
LCT is only calculated for new luxury cars. The amount of LCT equals
33% × 10 / 11 × MAX(Car Price Incl. GST –
Luxury Car Threshold, 0)
The Luxury Car Threshold differs depending on whether the luxury car is
fuel efficient or not. It should be also noted that different limits (or
thresholds) are currently used to calculate the LCT and the ITC, although this
was not the case in the past.
If a normal motor vehicle is selected, no LCT applies. This is the case, for
example, in a hire purchase where
- LCT is not payable by the Financier (who quotes the ABN); or
- the Hirer does not wish to obtain finance for the LCT.
For all types of finance, it is assumed that LCT is paid to the Dealer at
drawdown.
See also:
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