Luxury car tax: what is the luxury car tax threshold and the fuel-efficient car limit for the 2015-16 financial year?
The luxury car tax (LCT) threshold and the fuel-efficient car limit are determined in accordance with Division 25 of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act).
The LCT threshold for the 2015-16 financial year is $63,184.
The fuel-efficient car limit for the 2015-16 financial year is $75,375.
The LCT threshold is indexed annually according to a factor to be determined by Parliament or, if such a factor is not determined by Parliament, indexed annually in accordance with movements in the All Groups Consumer Price Index (All Groups CPI). [1]
Parliament has not determined an indexation factor, so for the 2015-16 financial year the LCT threshold will be indexed in accordance with movements in the All Groups CPI, unless the indexation factor is 1 or less. [2]
The indexation factor for the 2015-16 financial year is the sum of the index numbers for 2014-15, divided by the sum of the index numbers for 2013-14. Therefore the All Groups CPI indexation factor (rounded to three decimal places) for the 2015-16 financial year is: [425.7 / 417.0] [3] = 1.021
The indexation is greater than 1 and therefore the LCT threshold will be indexed.
The LCT threshold for the 2015-16 financial year is: $61,884 x 1.021 = $63,184
The fuel-efficient car limit is indexed annually in line with movements in the motor vehicle purchase sub-group of the CPI [4] , unless the indexation factor is 1 or less. [5]
The indexation factor for the 2015-16 financial year is the sum of the index numbers for 2014-15, divided by the sum of the index numbers for 2013-14. Therefore, the motor vehicle CPI indexation factor (rounded to three decimal places) for the 2015-16 financial year is: $ [382.1 / 384.6] [6] = 0.993
The motor vehicle CPI indexation factor for the 2015-16 financial year is 0.993 and therefore the fuel-efficient car limit will not be indexed.
The fuel-efficient car limit for 2015-16 will remain unchanged at $75,375.
The Determination applies to to the financial year commencing 1 July 2015.