What Is The Luxury Car Tax In Australia

If you have just spec’d a new LandCruiser 300 or a European SUV in Perth and the drive-away figure came back higher than expected, you have likely run into luxury car tax. LCT is a federal car tax that can apply when a luxury vehicle is bought new or near new in Australia, or when you privately import luxury cars. It sits separate from stamp duty, registration, and compulsory third party insurance.

Put plainly, once a car’s GST inclusive value clears the luxury car tax threshold, LCT can add thousands to the price. The rules are set by the Australian Taxation Office, and they catch more Perth buyers than you would expect as family SUVs creep into premium pricing.

At Sell My Car Pro, we see LCT come up constantly on valuations for late-model premium vehicles across Perth. Here is a plain-English breakdown of how it works, who pays, and what it means when you buy, import, or sell.

Why Luxury Car Tax Exists

Luxury car tax was introduced as part of Australia’s new tax system, often explained as a measure that once helped shield the Australian car manufacturing industry by keeping a heavier tax burden on expensive imported vehicles.

Today it still applies based on price, not badge. Plenty of everyday family SUVs and a growing list of electric vehicles land in the luxury cars category once drive-away pricing climbs high enough. We see this routinely on LandCruiser 300 Saharas, Ranger Raptor X builds, and loaded Prados.

Who Pays Luxury Car Tax?

In most cases the dealer or importer carries the LCT obligations, but the cost passes straight through to you in the sale price. If you privately import a vehicle from overseas, you may need to pay luxury car tax yourself as the importer. That catches Perth buyers every year chasing a JDM import or a European dream car.

When Does Luxury Car Tax Apply?

LCT generally applies to eligible vehicles that are two years old or less at the time they are imported or sold, which captures both new and near new car purchases.

It is aimed at passenger cars, broadly those designed to carry fewer than nine passengers and within the vehicle weight limits set in the legislation. Some commercial vehicles are excluded, particularly those designed mainly for carrying goods rather than passengers.

Luxury Car Tax Rate And Thresholds

Two figures do most of the work, and it is worth knowing both before you sign anything.

Luxury Car Tax Rate

The luxury car tax rate is 33%. It only applies to the portion of the price above the threshold, not the full purchase price. That distinction trips up buyers constantly.

Luxury Car Tax Threshold

Two thresholds apply: one for fuel efficient vehicles and one for everything else. For 2025 to 2026, the figures widely reported are:

• Fuel efficient vehicles threshold: $91,387
• Other vehicles threshold: $80,567

Because the thresholds are indexed, they shift each financial year, so always check the current figures before committing.

What Counts As A Fuel Efficient Vehicle?

From 1 July 2025, the definition tightened. A fuel efficient car for LCT purposes is one that does not exceed 3.5 litres per 100 kilometres. That change knocked plenty of hybrids and plug-in models out of the higher threshold overnight. If you are cross-shopping hybrids, check which side of the 3.5L/100km line your model sits.

What Is The LCT Value, And What Gets Included?

When luxury car tax is calculated, it uses the LCT value of the vehicle, not just the sticker price. It can include:

• the retail price of the car
• GST and any customs duty
• dealer delivery charges
• standard warranties
• accessories or modifications supplied at the time of sale (the “before delivery” extras).

Some costs sit outside the calculation, including stamp duty, registration, and certain insurance and finance costs.

How Is Luxury Car Tax Calculated?

A widely cited ATO formula is:

(LCT value − LCT threshold) × 10 ÷ 11 × 33%

The 10/11 step strips out the GST component before the LCT rate applies. If maths is not your thing, most dealers will itemise LCT on the quote, and the ATO publishes worked examples on its website.

Does Luxury Car Tax Apply To Used Cars Or Private Sales?

LCT is mainly a new or near new tax. Once a car is more than two years old, LCT generally does not apply to its sale.

If a car is resold within the first two years, LCT can come back into play, though most vehicles depreciate quickly enough that it was already settled at the first sale. For most Perth owners selling a used car privately, LCT is not something you calculate at the point of sale. It is usually baked into the original transaction.

Are EVs, 4WDs, Utes, Motorhomes Or Motorcycles Covered?

This is where sellers get caught out.

• Some electric vehicles and premium hybrids easily clear the thresholds, which is why LCT keeps coming up in EV conversations.
• Some 4WDs and utes are exempt if they are treated as commercial vehicles built mainly for carrying goods. Dual-purpose utes fall either side depending on payload and passenger rules, which is why a loaded Ranger Raptor and a bare-bones tradie ute can be treated differently.
• Motorhomes and certain special-purpose vehicles can be exempt in specific circumstances.
• Motorcycles sit outside LCT because the tax applies only to cars as defined in the legislation.

Exemptions And Refunds To Know About

LCT can be reduced or may not apply at all in some situations, including:

• some emergency vehicles
• some commercial vehicles
• disability modifications
• GST-free exports
• ABN holders using vehicles for specific qualifying purposes
• refunds in industries like primary production and tourism.

If you are buying through a business, loop in your accountant early so your tax system choices match your actual use case.

What This Means When You Sell Your Car

If you are selling a used vehicle in Perth, LCT does not usually change the selling steps, but it shapes buyer behaviour and pricing psychology. Buyers quietly benchmark your asking price against the new equivalent that once included LCT.

At Sell My Car Pro, we factor today’s live market data, condition, and local demand into every offer. If you are selling a premium model that originally attracted LCT, we can still help you land a fair price without the test drives, no-shows, and listing fees that come with private selling.

FAQs

Below are the LCT questions we field most often from Perth buyers and sellers.

Do I Pay Luxury Car Tax On Top Of GST?

LCT is a separate tax, calculated after the GST component is considered in the LCT value. In practice it adds to the drive-away figure you pay.

Is Luxury Car Tax The Same As Stamp Duty?

No. Stamp duty is a state based charge. Luxury car tax is federal and only kicks in above the LCT threshold.

What Is The Luxury Car Tax Threshold This Year?

For 2025 to 2026, the widely reported thresholds are $91,387 for fuel efficient vehicles and $80,567 for other vehicles.

Does Luxury Car Tax Apply To Used Cars?

Usually not. The tax generally applies to cars two years old or less, so most used cars sit outside that window.

Can I Avoid Luxury Car Tax By Adding Accessories Later?

Accessories and modifications supplied at the time of sale can be rolled into the LCT value, so loading it up before delivery can actually increase LCT exposure. Get tax advice before you rely on after-delivery fitment to change the number.

Conclusion

Luxury car tax feels complicated, but the core idea is simple. If a near new car exceeds the luxury car tax threshold, the luxury car tax rate of 33% applies to the portion above that threshold, and it is usually baked into what buyers pay.

Ready to sell a premium vehicle in Perth without the tax headaches or tyre-kickers? At Sell My Car Pro, you get a free car valuation, same day payment on accepted offers, and help with all the paperwork so the handover is clean. Get your instant quote today and sell your car with confidence.