Hi, I’m a small business owner about to buy a new car. What is the luxury tax threshold and what are the implications from a tax perspective if I’m $5-10k over the threshold?
Graham Doessel - CEO - MyCRA (Specialist Credit Repair) Lawyers (LPH)
Current Rating: 4.65 / 5
I just did a google search and found the ATO's website that gave me the following info:
Luxury car tax rate
Cars with a luxury car tax (LCT) value over the LCT threshold attract an LCT rate of 33%.
Financial year - 2017-18
Fuel-efficient vehicles - - - - Other vehicles
$75,526 - - - - - - - - - - - - - - $65,094
Hope that helps
Unless your business sells or imports luxury cars then the only impact for you is the fact that your car's cost has been jacked up to cover this cost.
Where you WILL get affected is in the areas of:
depreciation: you are only allowed to claim depreciation on the value UP TO the luxury car limit. The rest is on you, no tax deduction:(
also no GST on the excess over the luxury car tax limit......poo
and if you are trading through an entity and the car is provided to you as an employee.....you have FBT considerations, but that also applies for non-luxury cars.
I reckon a better value for money purchase is a second hand luxury car. you can buy a forest of walnut and acres of leather for less than $55k..........or buy a horse: there is no such thing as luxury horse tax:)
I agree with Brendan, unless you are in the luxury car business why are you thinking of throwing away thousands of dollars?
If your accountant said you need to spend some money or you’ll get a big tax bill, you need a new accountant.
I’m a finance broker (not an accountant) and I would be suggesting you invest further into the business, into growth/income assets or into Super.
Just my opinion
Best of luck with it