The Luxury Car Tax and Other Hidden Costs of Car Buying

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The Luxury Car Tax and Other Hidden Costs of Car Buying

Ever fancied rolling around in a Lamborghini Huracan and turning heads as you roll through the Maccas car park? For most of us, it’s only a dream. But there is one part of buying a Lamborghini Huracan which we ordinary folk can still enjoy with the utmost delight: Luxury Car Tax (LCT).

Yep, if you’re planning on buying a new car or a car that’s less than two years old, and it’s over a certain price threshold, you’re required to pay LCT. So, what is LCT, when do you need to pay it and what are the other hidden costs of car buying? Are you going to be taxed every time you sit in the car too? We know it’s frustrating, so here’s what you need to know.

What’s the threshold of the Luxury Car Tax?

At the moment (FY 2021-2022), the threshold of car value which requires LCT to be paid is $79,659 and $69,152 for fuel efficient vehicls. If you buy a new car or a car that’s less than two years old, you’ll pay LCT if the price is higher than the corresponding threshold.

What cars commonly attract Luxury Car Tax

You’d be surprised at which cars attract Luxury Car Tax the most – quite often, they’re not models of car that are typically viewed as ‘luxurious’. According to the Australian Automotive Dealer Association, the most commonly bought car that acquires Luxury Car Tax is the Toyota Land Cruiser, along with top-end versions of family cars like the Mazda CX-9, Nissan Pathfinder and Toyota Prado. Not exactly your prestigious Ferraris and Bugatti’s, huh?

How to avoid car tax

With any tax we have to pay, we ideally want to minimise it so that we keep more money in our own pocket. If you don’t want to wait til your ‘two-year sentence’ is up (the time when which a luxury car is no longer eligible for LCT), then there are a few exemptions available. You’re not required to pay Luxury Car Tax on a vehicle over the price threshold if:

  • buying used or demo cars
  • The car has been modified to be used for people with disabilities
  • The car is a motorhome or campervan
  • It’s a commercial vehicle designed for carrying goods

You have a quoted ABN and will be using the vehicle for business purposes.
And no, we don’t suggest putting a towbar on your Lamborghini Huracan so that you can claim that it’s for your lawn-mowing business. Although, that would be pretty cool.
The Luxury Car Tax can be a pain in the neck, but if you consult the right team of car brokers, you’ll forget all about it. are Australia’s best car broking team. They’ll compare deals across the model you’re looking for and get you the best price on your luxury car so that the luxury tax you pay seems non-existent. Get in touch with Carbroker and get behind the wheel of your dream car sooner!