Key Documents
The government is consulting on draft legislation to modernise the Luxury Car Tax (LCT).
In the 2023–24 Mid‑Year Economic and Fiscal Outlook, the government announced that from 1 July 2025 it would:
- tighten the definition of a fuel‑efficient vehicle
- align the indexation rate for LCT thresholds.
By encouraging uptake of fuel‑efficient vehicles, these measures support the Australian Government’s:
- National Electric Vehicle Strategy
- commitment to reduce greenhouse gas emissions by 43 per cent by 2030
- commitment to achieve net zero emissions by 2050.
Tighten the definition of a fuel‑efficient vehicle
There are 2 thresholds for the LCT:
- a higher threshold that applies to fuel‑efficient vehicles and
- a lower threshold that applies to all other luxury vehicles.
Cars with a value over the relevant threshold attract an LCT rate of 33 per cent.
The maximum fuel consumption for a fuel‑efficient vehicle will halve to 3.5 litres per 100 km. This means only electric, or partially electric, vehicles can use the higher threshold.
Align the indexation rate for LCT thresholds
The other vehicles threshold is indexed by the ordinary Consumer Price Index (CPI). This will change to the motor vehicle purchase sub‑group of the CPI.
This means the same indexation rate will apply to both thresholds.
Responding
You can submit responses to this consultation up until 16 October 2024. Interested parties are invited to comment on this consultation.
While submissions may be lodged electronically or by post, electronic lodgement is preferred. For accessibility reasons, please submit responses sent via email in a Word or RTF format. An additional PDF version may also be submitted.
All information (including name and address details) contained in submissions will be made available to the public on the Treasury website unless you indicate that you would like all or part of your submission to remain in confidence. Automatically generated confidentiality statements in emails do not suffice for this purpose. Respondents who would like part of their submission to remain in confidence should provide this information marked as such in a separate attachment.
Legal requirements, such as those imposed by the Freedom of Information Act 1982, may affect the confidentiality of your submission.
View our submission guidelines for further information.
How To Respond
Post
Address written submissions to:
Personal and Indirect Tax and Charities Division
Treasury
Langton Cres
Parkes ACT 2600
Enquiries
Email: Indirecttax@treasury.gov.au