This article explores everything you need to know, as a tourism and hospitality operator, about the luxury car tax (LCT): what it is, if it applies to you and how to get a refund if you’re eligible.
What is luxury car tax?
Luxury car tax (LCT) applies where the GST inclusive value of a car is above a certain threshold. The threshold for the 2023 financial year is $84,916 for fuel efficient vehicles and $71,849 for other vehicles.
The LCT is applied at a rate of 33% on the amount over the relevant annual vehicle threshold.
How much is the refund?
Tourism operators can claim up to a maximum of $10,000 of LCT they have paid for each eligible vehicle delivered to them on or after 1 July 2019.
For eligible vehicles delivered on or before 30 June 2019 only 8/33 of the LCT paid up to a maximum of $3,000 can be claimed.
This means multiple vehicles can be claimed during the same financial year.
Eligibility for refund
Tourism operators must first be registered for GST before they move on to the other two main criteria.
Only eligible vehicles can be claimed and the entity claiming must be a tourism operator for LCT purposes.
An eligible vehicle is a four-wheel drive, or all-wheel drive, and is either:
- A ‘passenger car’ with a ground clearance of at least 175mm, or
- An ‘off road passenger’ vehicle.
For LCT purposes you are a tourism operator if both the following apply:
- You use the car solely for the purpose of carrying on a business, and
- The principal purpose of your business is carrying tourists for tourism activities.
Tourism activities must be both leisure activities and of a touring nature. A leisure activity includes activities involving a visit by a tourist to a site that has one of the following:
- Scenic beauty
- Cultural interest
- Environmental interest
- Historical interest
- Recreational interest.
Carrying tourists for tourism activities does not include transporting passengers by either;
- Taxi or limousine for fares, or
- A hire car service
The process to submit a claim is simple – fill out the “application for luxury car tax refund – for primary producers and tourism operators” form and lodge it with the ATO. The refund must be claimed within 4 years of becoming entitled. Given the four-year period for making a refund claim, there is ample opportunity for you to review your records and see if you’ve missed any potential claims.
FOR MORE INFORMATION
If you’re still unsure as to your eligibility, please contact your local RSM office.