Luxury Car Tax

What LCT is

Luxury Car Tax is a federal tax applied to new and imported vehicles whose GST-inclusive price exceeds a threshold set by the ATO. LCT is levied at 33% on the dollar value above the threshold.

There are two separate thresholds:

• Fuel-efficient vehicles (using less than 7 L/100km for petrol/diesel, or electric/hydrogen): $91,387 in 2024-25
• All other vehicles: $80,567 in 2024-25

Both thresholds are indexed annually using the AWOTE (Average Weekly Ordinary Time Earnings) methodology and generally increase each financial year.

Why it matters for EVs

The fuel-efficient vehicle threshold is higher than the standard threshold, which is why most mainstream EVs clear it. But the LCT threshold is also the gatekeeping condition for the FBT exemption on novated leases.

An EV priced above $91,387 doesn’t qualify for the FBT exemption - which means it can still be salary-packaged as a novated lease, but FBT will apply, significantly eroding the tax benefit.

Vehicles like the BMW iX, Audi e-tron, Mercedes EQS, and Porsche Taycan all exceed the threshold. Premium variants of otherwise eligible models can also tip over - check whether the specific configuration you want clears the threshold before modelling novated lease savings.

How it’s calculated

LCT is calculated on the amount above the threshold. For a $100,000 EV:

• Amount above threshold: $100,000 − $91,387 = $8,613
• LCT payable: $8,613 × 33% = $2,842

The LCT is included in the drive-away price. It’s already baked into what you pay - dealers don’t usually itemise it separately in quotes.

LCT and stamp duty

Stamp duty is calculated on the purchase price after LCT is included. So buying a car that attracts LCT means paying stamp duty on a higher base price. Most Australian states have now removed stamp duty on eligible EVs, which reduces this double-taxation effect for those buyers, but it applies in full for petrol vehicles and EVs above the threshold in states that still charge stamp duty.

The indexation question

The $91,387 threshold is meaningfully higher than it was a few years ago. As EVs become more common in the mid-price range, more vehicles fall comfortably under the threshold - the Kia EV9 AWD at roughly $107,900 is above it, but the base EV9 at $101,900 is also above it, making it ineligible for FBT exemption.