Luxury car tax (Australia)
Luxury car tax
An Australian federal tax on the portion of a car's price above a set threshold, with a higher threshold for fuel-efficient vehicles.
Australia's luxury car tax works on a slice, not the whole: when a car's LCT value exceeds the threshold, the tax applies only to the amount above the line, not to the whole price. The ATO's formula subtracts the threshold, removes GST by multiplying by 10/11, then applies 33%. That design still bites at the upper end of the market, and importers price it into what Australian buyers see.
The detail that matters for CarPairly's comparisons is the second threshold: fuel-efficient cars get a higher line before the tax begins. From 1 July 2025, a fuel-efficient car is one with a combined fuel consumption of no more than 3.5 L/100 km, a stricter test than the 7 L/100 km used before. A conventional SUV and an electric car at similar prices can therefore carry different LCT burdens, which the raw list price hides.
Both thresholds are indexed and republished for each Australian financial year, so any dollar figure ages quickly. The Australian Taxation Office publishes the current values; verify there before doing serious budgeting on an upper-end purchase.
Differs by market
An AU-market tax. As of the 2026–27 financial year, the rate is 33% and the thresholds are A$91,661 for fuel-efficient vehicles and A$80,809 for other vehicles. The tax is 33% of the GST-exclusive amount above the threshold. Thresholds are indexed each financial year; check the Australian Taxation Office for current figures.