√Luxury Car Tax threshold increased, new-car buyers could save thousands

The Federal Government’s latest Luxury Car Tax threshold increase could result in savings between $1325 and $1530 for new-car buyers in Australia.

Some of the largest increases to the Luxury Car Tax (LCT) threshold in more than a decade have been announced – saving buyers of certain new cars up to $1530 – before stamp duty charges are also applied.

For the 2023-24 financial year (from July 1), the LCT threshold is set to go up by 7.1 per cent for vehicles with claimed fuel use ratings of more than 7.0 litres per 100km.

The threshold for the category of “fuel-efficient vehicles” – deemed as those claimed to consume less than 7.0L/100km, including electric cars – is set to go up by 5.2 per cent.

The tax – which adds a 33 per cent tariff to each dollar above the threshold – now applies to non-fuel-efficient vehicles priced from $76,950 (up from $71,849), or $89,332 for fuel-efficient vehicles (up from $84,916).

This means buyers of certain standard vehicles which are priced above the old and new LCT thresholds will pay up to $1520 less in tax, while buyers of fuel-efficient vehicles could save up to $1324.80.

MORE: Renewed calls to abolish Luxury Car Tax after it impacts more Toyotas than Porsches

This year’s increase to the LCT threshold for fuel-efficient vehicles is not as significant as last year – the largest increase to the tax threshold on record – but this year’s increase for non-fuel-efficient models is the largest for this category of vehicle in a decade.

As stamp duty is calculated after the LCT is applied, this will also reduce the amount new-car buyers will have to pay to their state or territory governments when purchasing a new car.

The Luxury Car Tax is applied to a vehicle’s base price plus the dealer delivery charge – which can vary between $1000 and $4000 – and any optional extras.

Research by Drive shows at least eight ‘fuel-efficient’ new cars appear to no longer be above the new LCT threshold – such as the Tesla Model 3 Performance electric car – though metallic paint and optional equipment could push them beyond the updated figure.

Similarly, approximately 55 non-fuel-efficient vehicles have been impacted by the LCT change, Drive has found, with their respective list prices – minus dealer delivery charges – now less than the new threshold.

As previously reported by Drive, the most recent Federal Budget has forecast a decrease in revenue from Luxury Car Tax of almost 36 per cent – from the record $1.14 billion to $840 million – from the 2022-23 to 2024-25 financial years.

But the Federal Government has not signalled its intention to abolish the Luxury Car Tax entirely despite lobbying from car industry, which argues it was introduced to protect local car manufacturing which ended six years ago.

Luxury Car Tax thresholds since 2010

Financial year	Fuel-efficient vehicles	Non-fuel-efficient vehicles
2023–24	$89,332	$76,950
2022–23	$84,916	$71,849
2021–22	$79,659	$69,152
2020–21	$77,565	$68,740
2019–20	$75,526	$67,525
2018–19	$75,526	$66,331
2017–18	$75,526	$65,094
2016–17	$75,526	$64,132
2015–16	$75,375	$63,184
2014–15	$75,375	$61,884
2013–14	$75,375	$60,316
2012–13	$75,375	$59,133
2011–12	$75,375	$57,466
2010–11	$75,375	$57,466