Luxury car tax: what is the luxury car tax threshold and the fuel-efficient car limit for 2018-19 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 2018-19 financial year is $66,331.
The fuel-efficient car limit for the 2018-19 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 2018-19 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 2018-19 financial year is the sum of the index numbers for 2017-18, divided by the sum of the index numbers for 2016-17. Therefore, the All Groups CPI indexation factor (rounded to three decimal places) for the 2018-19 financial year [3] is: (446.8 / 438.5) = 1.019
The All Groups CPI indexation factor for 2018-19 financial year is greater than 1 and therefore the luxury car tax threshold will be indexed.
The luxury car tax threshold for the 2018-19 financial year is: 65,094 * 1.019 = $66,331
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 2018-19 financial year is the sum of the index numbers for 2017-18, divided by the sum of the index numbers for 2016-17. Therefore, the motor vehicle CPI indexation factor (rounded to three decimal places) for the 2018-19 financial year [6] is: (373.0 / 376.7) = 0.990
As the motor vehicle CPI indexation factor for the 2018-19 financial year is less than 1 the fuel-efficient car limit will not be indexed.
The fuel-efficient car limit for the 2018-19 financial year remains at $75,526.
The Determination applies to the financial year commencing 1 July 2018.