Luxury car tax: what is the luxury car tax threshold and the fuel-efficient car limit for 2016-17 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 luxury car tax threshold for the 2016-17 financial year is $64,132.
The fuel-efficient car limit for the 2016-17 financial year is $75,526.
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 2016-17 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 2016-17 financial year is the sum of the index numbers for 2015-16, divided by the sum of the index numbers for 2014-15. Therefore, the All Group CPI indexation factor (rounded to three decimal places) for the 2016-17 financial year is: (432.1 / 425.7) [3] = 1.015
The All Group CPI indexation factor for 2016-17 financial year is greater than 1 and therefore the luxury car tax threshold will be indexed.
The luxury car tax threshold for the 2016-17 financial year is: $63,184 x 1.015 = $64,132 Fuel-efficient car limit
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 2016-17 financial year is the sum of the index numbers for 2015-16, divided by the sum of the index numbers for 2014-15. Therefore, the motor vehicle CPI indexation factor (rounded to three decimal places) for the 2016-17 financial year is: (382.7 / 382.1) [6] = 1.002
The motor vehicle CPI indexation factor for the 2016-17 financial year is greater than 1 and therefore the fuel-efficient car limit will be indexed.
The fuel-efficient car limit for the 2016-17 financial year is: $75,375 x 1.002 = $75,526
The Determination applies to the financial year commencing 1 July 2016.