Luxury Car and the Luxury Car Tax

Buying goods, food or just anything will always hurt our pocket. The tax is already added on the selling price of the particular item. For instance, if you go to the grocery or department store the goods that you intend to buy are already taxed. The tax is already added to the price tagged for every item; hence you’re left without a choice but to buy the said items at face value. Everything is taxed and that’s what we have to pay back to the government for the salaries we earned for the whole year.

Luxury Car Tax

Buying a car does not spare you from paying taxes. Hence, it is important that you should know something about taxes and how it is imposed. There are different ways that can help you acquire a car or a vehicle, either it is a new unit or a used unit. You can purchase it in cash basis using your hard earned money; you can also have it financed to a financing institution or purchase it by installment basis. You can purchase a brand new car right from the manufacturer or dealer after you saw it. You can also purchase a used unit or a unit which has been foreclosed by a financing institution.

If you’re in Australia (or in other countries) and you’re considering buying a car, you have to consider first the selling price of the car (minus the tax that you’ll pay for the car). The tax will only be imposed if you have already purchased the said car.

If you shop around looking for a car you’re most likely to spend less, especially if you seek the services of the Australian RAC. They will help you purchase a good, quality car. The Australian RAC will inspect the car or vehicle that you would like to purchase.

If you opt to buy a used car from a registered dealer you’re guaranteed to have the title and ownership of the particular car. You’re also protected by the Motor Dealers Compensation Fund.

The warranty of one state differs from the other state. A vehicle which is already 10 years old and has travelled covering a total distance of more than 160,000 km will have 3 months warranty.   However, vehicles which were already more than 10 years old will be given a short warranty or in some cases will have no warranty at all, as provided by law.

If you opt to buy a car or vehicle from an auction sale or from a private entity, it is important for you to check and verify if the seller has REVS or a Registration of Encumbered Vehicles certificate. If he can’t produce the REVS or he has really no REVS certificate the seller has no right to sell the vehicle. However, if the subject vehicle is not encumbered, the seller or you can just buy a REVS certificate for only $12. This will prevent or stop a financier to repossess the vehicle if someone is still in debt on the vehicle. To help you and other buyers further, you can visit the REVS website where you can check and verify the REVS of a particular transaction. The REVS website can also give you some tips and guidelines if you want to purchase vehicles in Australia.

The taxes which are incorporated in the registration cost are broken down as follows:

  • The registration, transfer fee, based on New South Wales is $24
  • The Stamp duty payment depends on the state

 

STAMP DUTY/VEHICLE REGISTRATION DUTY ON PURCHASED VEHICLES

 

               Car Value/Private Motor Vehicle
$10,000 $20,000 $40,000 $80,000
New South Wales $300 $600 $1200 $3100
Victoria (New Cars) $250 $500 $1000 $4000
Queensland $300 $600 $1200 $2400
Western Australia $125 $550 $2300 $5200
South Australia $340 $740 $1540 $3140
Tasmania $300 $600 $1600 $3200

 

  • The Motor Vehicle Tax- is paid yearly on all vehicles. This particular tax should be renewed on its due date. The cost for a medium car is $177 and for the large car in South Wales is $205
  • The compulsory third party insurance will pay for the injuries that you have given to other people. For instance, the compulsory third party insurance per year is $300.
  • The Luxury Car Tax- This tax is paid by businesses which purchase luxury cars in other countries. In some instances, the LCT or Luxury Car Tax is withheld if the Australian Business Number (ABN) is cited or mentioned in the proper format to the supplier or customs.

The LCT or the Luxury Car Tax is an additional charge to the Goods and Services Tax or the GST which should be paid by the buyer. This however should not be based on the total price of the vehicle. The LCT is only 33% of the value of the Goods and Services Tax (GST).

 

Quotation of the ABN or the Australian Business Number is only allowed for the following reason:

  • The vehicle is exported in the event that the transaction is GST-free
  • If a research is undertaken for the manufacturer of the vehicle
  • The vehicle is upheld and consider as a trading stock. It should not also be a subject for renting or leasing.

The Luxury Car Tax should be paid when you consider selling the luxury car or when you cease using it. This happens when you hold the car as a trading stock and then you start to use it for private reasons or if the car or vehicle is considered an asset of your business.

Other instances wherein you have to pay for the luxury car are when you consider buying a car from an agent or dealer which cost more than $57,009 inclusive of the stamp duty.

A car which cost $80,000 will pay a Luxury Car Tax of $5,225 while a car which cost $100,000 will pay for a Luxury Car Tax of $10,000.

You should also remember that if you purchase a car from a private entity, you will not be obliged to pay the Luxury Car Tax.