Latest News

Hot Issues
spacer
Businesses ghosting the ATO targeted in debt collection blitz
spacer
Claiming the tax-free threshold: getting it right
spacer
Aussies tired of ‘dodgy tax criminals’, warns ATO
spacer
Protect your small business by following these essential steps.
spacer
Super guarantee a focus area for ATO business debt collection
spacer
Controversial ‘Airbnb tax’ set to become law
spacer
Withholding for foreign residents: an ATO focus area
spacer
1 in 3 crypto owners confused about tax, study reveals
spacer
20 Years of Silicon Valley Trends: 2004 - 2024 Insights
spacer
ATO reveals common rental property errors from data-matching program
spacer
New SMSF expense rules: what you need to know
spacer
Government releases details on luxury car tax changes
spacer
Treasurer unveils design details for payday super
spacer
6 steps to create a mentally healthy and vibrant workplace
spacer
What are the government’s intentions with negative gearing?
spacer
Small business decries ‘unfair’ payday super changes
spacer
The Leaders Who Refused to Step Down 1939 - 2024
spacer
Time for a superannuation check-up?
spacer
Scam alert: fake ASIC branding on social media
spacer
Millions of landlords the target of expanded ATO crackdown
spacer
Government urged to exempt small firms from TPB reforms
spacer
ATO warns businesses on looming TPAR deadline
spacer
How to read a Balance Sheet
spacer
Unregistered or Registered Trade Marks?
spacer
Most Popular Operating Systems 1999 - 2022
spacer
7 Steps to Dealing With a Legal Issue or Dispute
spacer
How Do I Resolve a Dispute With My Supplier?
spacer
Changes to Casual Employment in August 2024
spacer
Temporary FBT break lifts plug-in hybrid sales 130%
spacer
The five reasons why the $A is likely to rise further - if recession is avoided
spacer
June quarter inflation data reduces risk of rate risk
spacer
‘Bleisure’ travel claims in ATO sights, experts warn
spacer
Taxing unrealised gains in superannuation under Division 296
Article archive
spacer
Quarter 3 July - September 2024
spacer
Quarter 2 April - June 2024
spacer
Quarter 1 January - March 2024
spacer
Quarter 4 October - December 2023
spacer
Quarter 3 July - September 2023
spacer
Quarter 2 April - June 2023
spacer
Quarter 1 January - March 2023
spacer
Quarter 4 October - December 2022
Government releases details on luxury car tax changes

The draft legislation aims to modernise the luxury car tax by tightening the definition of a fuel-efficient vehicle and adjusting the indexation rate.

.

The government has released draft legislation to update the luxury car tax (LCT) after previously announcing it would tighten the definition of a fuel-efficient vehicle and align the indexation rate for LCT thresholds.

The changes will be in effect from 1 July 2025, the government said. 

There are currently two thresholds for the LCT which include a higher threshold that applies to fuel-efficient vehicles and a lower threshold that applies to all other luxury vehicles.

The new amendment will update the definition of a fuel-efficient car by reducing the maximum fuel consumption for a car to be considered fuel-efficient for the LCT to 3.5 litres per 100 kilometres from the current seven litres per 100 kilometres.

The aim behind tightening the definition of a fuel-efficient vehicle is to ensure only electric, or partially electric vehicles can use the higher threshold of the LCT.

The government said this amendment will “incentivise” the uptake of electric or partially electric vehicles.

The LCT amendment will also see a change in the index number used to index the LCT threshold from all groups CPI to the motor vehicle purchase sub-group of the CPI.

The higher threshold that applies to fuel-efficient luxury cars is known as the fuel-efficient car limit and is indexed annually using the index number for the motor vehicle purchase sub-group of the CPI.

The lower threshold that applies to all other luxury cars is indexed annually using the index number of the all groups CPI.

The government said it is seeking to change this as the indexation rates haven’t grown at the same pace and have instead converged.

“At the time of its introduction in 2008, the fuel-efficient limit was set at $75,000, whilst the LCT threshold for all-other luxury cars was $57,180,” the government said.

“Since then, there has been weaker growth in the motor vehicles sub-group of CPI compared to all groups CPI which has caused the differential between these two thresholds to narrow.”

“For the 2024-25 financial year, the fuel-efficient cars threshold sits at $91,387, whilst the threshold for all-other luxury cars is at $80,567.”

The government said this amendment will aim to align these indexation rates to ensure that LCT thresholds grow at the same pace, ensuring the concessional LCT treatment for fuel-efficient vehicles is maintained.

By encouraging the uptake of fuel-efficient vehicles, various Australian government strategies will also be supported, including the National Electric Vehicle Strategy, the commitment to reduce greenhouse gas emissions by 43 per cent by 2030, and the commitment to achieve net zero emissions by 2050.

 

 

 

 

Imogen Wilson
24 September 2024
accountantsdaily.com.au

Liability limited by a Scheme approved under Professional Standards Legislation.
© O'Brien and Partners 2024 - All Rights Reserved | 333 Canterbury Road, Canterbury VIC 3126 | Tel: 03 9509 3911 Site by Acctweb