How a new Luxury Car Tax threshold is leading to lower prices

The Luxury Car Tax (LCT) threshold has increased for the 2024-25 financial year, which should mean lower prices for numerous models on the new car market.

The LCT threshold for the majority of vehicles – those which consume more than 7.0L/100km, and excluding commercial vehicles, campervans, motorhomes, emergency vehicles and vehicles with modifications for people with a disability – is now $80,567 for FY2024-25, up from $76,950.

In addition, the threshold for fuel-efficient and zero-emissions vehicles – which quote a fuel consumption figure of 7.0L/100km or less – is up from $89,332 to $91,387.

Businesses which sell or import cars with a GST-inclusive value above the LCT threshold are required to pay the tax, which is charged at 33 per cent per dollar above the threshold and often passed on to new car buyers.

As such, models that are now exempt from the tax could become cheaper, although manufacturers are within their rights to offset the exemption with price hikes.

Popular models that headline the list of cars newly exempt from LCT include the Ford Everest Platinum, Ford Mustang GT, and Hyundai Palisade Calligraphy.

In the efficient vehicles bracket, a pair of Lexus SUVs, a Mercedes-Benz and an Audi are now exempt from LCT.

Per pricing available online on July 4, 2024, the following vehicles are now exempt from LCT:

The eligibility criteria for vehicles to be considered ‘fuel-efficient’ is set to change from July 1, 2025 following the introduction of the Federal Government’s New Vehicle Efficiency Standard (NVES) from January 1.

The threshold is set to be halved from 7.0L/100km to 3.5L/100km, which will significantly reduce the number of vehicles exempt from LCT.