Luxury Car Tax, Australia
Background The luxury car tax is imposed by 3 Acts:
(a) the A New Tax System (Luxury Car Tax Imposition - General) Act 1999; and
(b) the A New Tax System (Luxury Car Tax Imposition - Customs) Act 1999; and
(c) the A New Tax System (Luxury Car Tax Imposition - Excise) Act 1999.
Introduced
Effective 1 July 2000
Design
This is a single stage tax that is imposed on supplies and importations of luxury cars and is in addition to any GST that may be payable. The tax is only calculated on the value of the car that exceeds the luxury car tax threshold.
Amounts of luxury car tax are included in net amounts under the GST system. This has the effect of incorporating the luxury car tax into the payments and refunds system for the GST. However, luxury car tax on importations is paid with customs duty (where appropriate).
Expectations (Ex ante Analysis)
The Rate of LCT is to be 25% calculated on the value of the car above a LCT threshold.
The LCT threshold proposed is a GST-inclusive value equal to the car depreciation limit that applies under Subdivision 42-B of the Income Tax Assessment Act 1997 for the year in which the supply of the car occurs. The car depreciation limit for the 1998-99 financial year was $55,134. This is a departure from that proposed in the Tax Reform Plan, which stated that the LCT threshold would be equal to a GST-inclusive value of $60,000.
References
http://law.ato.gov.au
http://www.aph.gov.au/library/pubs/bd/1998-99/99bd159.htm
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