Australia’s luxury car tax threshold quietly lifted for electric vehicles

The Driven

The level of luxury car tax imposed on electric vehicle and “fuel efficient” cars in Australia has been quietly relaxed – the first time that EVs and fuel efficient cars have been given a bigger break than their fuel guzzling competitors in more than a decade.

The level of LCT for electric vehicles and fuel efficient cars will be relaxed to $77,565 from today (July 1, the start of the 2020-21 financial year), up from $75,526, while the level for fuel guzzling petrol and diesel cars is relaxed to $68,740 from $67,525.

The changes are believed to have been introduced – without fanfare – in the last two weeks.

It is the first time in more than a decade that the LCT for electric vehicles has moved more than the LCT changes for inefficient petrol and diesel cars. Over the previous 10 years, the LCT for EVs had increased by a paltry total of $526, while over the same period the LCT for inefficient fossil fuel cars jumped from $57,180 to $67,525.

The LCT imposes a tax of 33 per cent for the cost of the vehicle above the threshold. So, a Tesla Model 3 performance version ($97,425) will incur a luxury tax of about $6,560, in addition to GST (about $9,000) and stamp duty (about $4,500 depending on the state).

That’s nearly $20,000 in taxes in a car that costs, after on roads, about $107,000, at a time when most other countries are offering discounts and other incentives for zero emissions vehicles. No wonder Tesla CEO Elon Musk thought that Tesla cars were expensive in Australia.

To read the full story, please go to our EV-focused sister site The Driven, and click here.