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Luxury Car Tax (LCT) threshold increased for the 2023-24 financial year

29/05/2023 by Lania Mason in Industry news

From the 1st of July 2023, the federal government will increase its Luxury Car Tax (LCT) thresholds helping many Australians save thousands on the price of a new vehicle.

The LCT threshold for ‘fuel efficient’ vehicles will be raised from $84,916 to $89,332, and the LCT threshold for all other vehicles will increase from $71,849 to $76,950.

Financial Year Fuel-Efficient Vehicles Other Vehicles
2023-24 $89,332 $76,950
2022-23 $84,916 $71,849

New car buyers

LCT is charged at a rate of 33% for every dollar over the threshold. The LCT threshold increases are welcomed news for car buyers as they reduce the amount of LCT payable on vehicles priced above the threshold amounts.

The good news continues for consumers looking to purchase electric vehicles as many more models will now be considered eligible for the FBT Exemption under the Electric Car Discount Bill.

Additional State-level rebates and incentives are available for electric vehicles, potentially making them eligible for financial benefits. These measures can substantially decrease the expenses associated with owning and using an EV in Australia, thereby enhancing accessibility and appeal to a broader spectrum of drivers.

Electric Vehicle FBT Exemption and Luxury Car Tax

Effective from the 1st of July 2022, the Electric Car Discount Bill removes import tariffs and Fringe Benefits Tax (FBT) on eligible vehicles.

The FBT exemption applies to vehicles where the following criteria are met:

  • The car is a zero or low-emissions vehicle
  • The first time the car is both held and used is on or after 1 July 2022
  • The car is used by a current employee or their associates (such as family members)
  • Luxury Car Tax (LCT) has never been payable on the importation or sale of the car

To be eligible for the FBT exemption, the electric car’s value as at the first retail sale must be below the fuel-efficient vehicles’ Luxury Car Tax (LCT) threshold, being $89,332 in the 2023/24 income year, and in any subsequent sale.

Novating an electric vehicle

Electric vehicles obtained through a novated lease qualify for the FBT exemption, so long the vehicle meets the specified exemption criteria.

Like traditional petrol or diesel vehicles, you can choose to pursue a novated lease for an electric vehicle, allowing the expenses associated with the car including its running costs to be deducted from your pre-tax salary.

Whether you're a company seeking fleet vehicles or an individual searching for a personal car, Fleetcare is available to assist you in transitioning to electric. Don't hesitate to reach out to us today at 134 333.

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