ATO to close Luxury Car Tax loophole

By Matt Brogan | November 27th, 2009

The Australian Taxation Office is continuing to look into a loophole linked to the Luxury Car Tax (LCT).

Earlier this month it was revealed that if licensed motor car traders (LMCTs) own a car for more than two years before it is sold for the first time then no LCT is due.

The LCT adds 33 per cent to every dollar spent above $57,180.

The threshold is raised to $75,000 for ‘fuel efficient’ cars – those that have a combined fuel consumption rating not exceeding 7.0 litres/100km combined.

LMCT holders can also avoid paying stamp duty on their new cars, and naturally the savings increase with the prices.

For example, a $64,340 Citroen C5 2.7 HDi Exclusive cops $2150 LCT taking it to an RRP of $66,490.

Stamp duty ranges from $2327.15 to $4321.85 depending on which state it is purchased in.

Something a little more luxurious, like a $216,100 Jaguar XKR Convertible, pushes the LCT out to around $47,500 and stamp duty to as much as $17,121.

And a $680,000 Lamborghini Murciélago LP640 Roadster E-gear gets a whopping $131,000 piled on in total.

Although it probably won’t bother you in the slightest if can afford the best part of one million clams for a Lambo anyway.

by Tim Beissmann

From The Sales Floor

In Victoria as I guess in all states it also doubles the stamp duty on the total amount ( tax on tax or double dip ) also a lot of ” ordinary cars ” not just the ones shown are affected by this tax – you the buyer pays
Rick

I’m thinking of going on a shopping spree. Can someone remind me again how much luxury tax is going to be applied to my Riviera 58 motor yacht ? Of course i’ll also need a helicopter to get there, a nice supercharged jet-ski and one of those fancy jet RIB tenders as well. Oh and a nice 2 carat diamond ring for my lovely wife to keep her happy. What – NO luxury tax on any of that ? Hmmmmm …..

JEKYL & HYDE

and here are the finalists for “quote of the month”…

Cupid Stunt

Hear hear or is it here here

MJ

A diamond ring DOES NOT use imported oil, cause pollution, traffic congestion, wear and tear of the roads etc.

Jester

C’mon, don’t be crazy MJ – it has nothing to do with oil or pollution, and trust me, a 20K car may create more co2 than a 100K car – still ATO only bends over those ones that worked hard so they can afford a decent car.
Don’t get me even started on boats, and things like that – yet again is the motorists that finance this country.

Deco

Luxury Car Tax is absolute BS.

At $57,000, most he cars aren’t even bloody luxury cars.

The government has to get with the times an set a realistic tax level.

$75000 for all cars, and $90000 for fuel efficient cars would still give the government the money it wants, while being more reasonable to the consumer.
LCT Free

What’s with the Luxury Car Tax anyway? This tax should be scrapped and a basic Stamp Duty charged to cover the costs. I don’t care if you drive a million dollar Lamborghini or a $13,000 Holden Barina. Your money, spend it as you please.
As for tax deductions, limit the maximum value claimable for taxation purposes and watch all the high flyers rorting the system trade their supercars for something more affordable. Claimable costs per km should be based on engine capacity and that’s it. If your vehicle costs are excessive due to fuel consumption, insurance, maintenance etc, buy a more suitable vehicle for the task. Why should the tax payer have to pay for high insurance costs, fuel consumption etc as a tax deduction for you because you choose to drive that car.

jack

“Claimable costs per km should be based on engine capacity and that’s it. ”

I’d quantify that bit, for some cars with bigger engines and more torque will consume LESS fuel on an everday driving cycle than cars with smaller, more stressed engines. Particularly as most vehicles continue to gain weight.

With that line of thought we will all be driving 1500kg cars with 1.2L twin turbo mixmasters under the bonnet, consuming 10.5L/100km in the real world!

Chris

What you can claim is generally limited to the lct threshold so
“As for tax deductions, limit the maximum value claimable for taxation purposes and watch all the high flyers rorting the system trade their supercars for something more affordable.”
Your way off there !!!
There are no perciveable tax benefits to owning a Supercar unless its a hire car/promotion vehicle (better be certain)(not tax advice ) most people that own these cars own them because they want them, not because of the vehicles tax benefits look at the tax on a 200k car GST, Stamp duty, LCT its crazy !!!
Millbrook

They’re complaining about a handful of people in the market who are getting to drive a nice car without the heavy tax implications – And yet, Kerry Packer could get away with paying $42 Tax per annum (est.) from the Billions he earned. How much money did the Gov. invest/throw away in finding a way to close this loop-hole and how much will it actually save average Tax Payers??

While we’re on the topic, how much does the Government actually make from us numpties who let them get away with it!!

Example: Luxury/Prestige Vehicle Invoice Price to Motor Dealer $150,000
Jab 1 – + Import Duty @ 10% 15,000 – $165,000
Jab 2 – + Luxury Car Tax 33% of every $100 above $57,009 35,640 – $200,640
Jab 3 – + GST @ 10% 20,064 – $220,704
Jab 4 – + State Stamp Duty (NSW EG. 3%of $45k, then 5%) 10,135 – $230,839
Total Government GRAB!!! $80,839 or 53.89%

Not only that – us dumb fools then allow them to charge us “Stamp Duty” again when we buy it as a Used Car – wasn’t that supposed to go away when GST came in???
The average car will change hands 3 or 4 times in 8 Years and I’m not even going to get into the maths on that one; or the amount of money made on Rego Plates and So-called Premium Plates (don’t be a F**KWIT) – imagine; almost a million cars are sold in Australia each year and the Gov. (Fed & State) and RTA still cry poor when it comes to requests to build safe roads, improve infrastructure and give us the value we deserve instead of more fines & tolls, and new laws to hit us even harder in the pocket.

Waken up Australia!!!

Rick

Nicely illustrated – car buyers are cash cows – I’m sick of been gouged by the Government every time you need to buy a car – but unfortunately there’s not much one can do about it.

Millbrook

And yes, they do apply tax on top of tax – now that would be funny if it weren’t so damn insulting to our intelligence.

How many jobs would be created or saved if the extra money handed to the Government was spent or invested in others ways throughout Australia?? Why can’t we pay the same as other countries for cars??

jack

Completely agree. If the money taken in tax was returned to the pockets of the people, then we would watch the economy SOAR.

For example, in the late 1950′s Japan reduced its tax level to around 11%. They massively simplified and reduced their tax system, too. In the next decade, their economy absolutley took off like a rocket. Most ironically, the ACTUAL GOVERNMENT TAX INTAKE INCREASED TENFOLD BY 1970! Just through growth in the economy.

(It can be argued that Japan was fast tracked on growth at the whim of US administrators as a perceived buffer to the rising communism throughout SE Asia during this time; whatever, it worked.)

Currently, nowhere in the Western world are any government game to leave the ‘hands off’, and let the people create the prosperity that ALWAYS occurs when taxes and regulation and size of government are small.

We could scale back these impositions. Simple. Cheap.

Or we could continue on our current path of massive debt creation (government bonds) to goose the economy “back” via ‘nation building projects’ thus guaranteeing future tax hikes to pay it off, which is another “brake” on the economy.

LCT at 57K, when the average wage per annum is similar to this – pfff! Where’s the Tea Party on this one?

http://carz.com/ Carz

WOW! Great looking cars…definitely looks expensive and huge tax. This is so sad…I sometimes wish tax on cars like these are not that high…
The Realist

Typical government response – let’s not efficiently use the vast sums of money we have, let’s just find another avenue to raise more tax monies.

Strange how the LCT limit has not kept pace with inflation…
IRONGAV

As a car enthusiast, who would love to buy one of these percieved “luxury” cars such as a Porsche 911, I’ve been doing some research into the justification of the LCT given by the government when it put forward the bill to raise the tax from 25% to 33%. Thus far I can’t see any justification that is backed by solid facts. Claims that it is hitting the fat cats who want their ferrari’s and rolls royces is completely false when 80% of the cars purchased that are effected by the LCT are large people movers bought by families. Claims that it is for the benefit of the environment etc is completely blown out of the water by the fact that million dollar cruisers use up to 300l of fuel per hr. and are not hit with luxury tax. On top of that, we’re the only country that has a Luxury Car Tax… Basically for me, it comes down to the fact that I’d love to buy a Porsche (which on my salary would mean sacrificing over 50% on repayments) but rather that $250,000, I’d like to pay $190,000, or in other words, the great car without the LCT tax rip off. Does anyone know how to voice an argument that may be heard to the government on this matter? How do we call them out on their obvious political posturing to hit the rich bastards and give to the little battlers?