Australian car brands split on decision to pass on Luxury Car Tax savings

The Australian Tax Office announced a $1568 increase to the LCT threshold from July 1, which sees the threshold rise to $61,884. (There has been no change to the threshold for ‘fuel-efficient cars’, which remains unchanged at $75,375).

LCT is a tax of 33 per cent on so-called ‘luxury cars’ priced over the $61,884 threshold, with the tax applying only to the amount above that price point. The maximum tax reduction for vehicles priced over the threshold is $470, while other vehicles priced just above the $61,884 figure are subject to smaller tax reductions.

As LCT is incorporated into the manufacturer’s list price of each applicable vehicle, it is up to each manufacturer whether they pass on the saving to customers directly through price cuts, indirectly through other value-add methods, or not at all.

BMW, Infiniti, Jaguar, Land Rover, Lexus, Mazda, Mercedes-Benz, Porsche, Range Rover, Toyota and Volvo all confirmed they have passed on the tax reduction in full to customers through a reduction in the list prices of affected vehicles.

Toyota went as far as to call for the tax to be abolished, as several of its models - including the top-end versions of the Kluger SUV, Tarago people mover, LandCruiser Prado SUV and LandCruiser 200 Series models - are hit by LCT.

"Australian motorists are already heavily taxed with GST, stamp duty and registration fees when buying a new car, as well as road tolls and a hefty tax on fuel," said Toyota Australia executive director of sales and marketing, Tony Cramb. "New-vehicle buyers should not be singled out to pay the additional burden of a so-called luxury tax - especially one that is so inefficient and poorly designed."

Audi, Chrysler, Jeep, Lamborghini, Lotus, Maserati, Mitsubishi, McLaren, Mitsubishi, Nissan and Volkswagen told CarAdvice they had elected not to pass on the saving to customers directly through price cuts at this stage.

Audi Australia senior product communications executive Shaun Cleary said a final decision had not been made yet, but suggested the brand was likely to increase the value of affected models by adding features to MY15 vehicles, which should start arriving here in the final quarter of next year.

Lamborghini Australia spokeswoman Susan Darwiche said no price changes had been passed on from head office, though said pricing, as always, would be a matter of dealer discretion.

Lotus and Maserati Australia general manager Glen Sealy said there were no changes to the prices of its vehicles at this stage but confirmed the situation would be assessed as part of the brands’ product programs for the second half of the year.

McLaren Australia brand manager Jay McCormack said the company had already effectively passed on the savings to customers after pre-empting the threshold increase when repositioning its line-up in May 2013.

Volkswagen Australia communications general manager Karl Gehling said the brand was currently reviewing the specification and pricing of models priced above the threshold.

Ford Australia brand communications associate Martin Gunsberg said the limited edition FPV GT F was the only model in its showroom affected by the LCT, and said its price had already been fixed earlier in the year.

CarAdvice has contacted Aston Martin, Bentley, Ferrari, HSV, Peugeot and Rolls-Royce about their decisions, and will update this story as news comes to hand.