Luxury Car Tax (LCT) Increase - How Do You Feel?

[PaulRozza]

Well, the 'new' government has decided to hit those of us fortunate enough (read: those of us that work our asses off to be in a position) to afford a 'luxury car'. As one of many that have preordered an R36 Passat, this is just another few $'000 into the govt's coffers. Anyone else unhappy with this?

[Vene]

So if the contract is signed, does it still have provision to introduce this tax?

[RhysQ]

Well, the 'new' government has decided to hit those of us fortunate enough (read: those of us that work our asses off to be in a position) to afford a 'luxury car'. As one of many that have preordered an R36 Passat, this is just another few $'000 into the govt's coffers. Anyone else unhappy with this?

the tax is for cars over $57,000...correct? i had a look in the paper at a schedule of the taxes for random different car prices. for a $67,000 car (ford territory as per The Bulletin) the tax difference from current is $500. i'm pretty sure if you can afford a $67,000 car you can afford the extra $500.

as for a $309,000 car (porsche as per The Bulletin), the tax difference from current is $15,000. once again, if you can afford a car worth that, $15,000 would be bread crumbs.

final one, a $100,000 car, the tax rise is from $8,000 to $10,500.....not really that much.

the one thing however, i don't agree with, is the price at which the luxury car tax starts. since when is a $57,000 car a luxury car. i don't consider a toyota landcruiser a luxury car.....do you?

it should be up around $70,000 - $75,000.

Cheers,
Rhys

[Cro]

I'm quite annoyed as I work bloody hard to get the things I want.
All the extra $$$ I'll be paying will be going to some slacker who is happy on 50k a year or less for the rest of their life and that gives me the ****s.
This government seems to punish people for working hard and wanting to advance their careers.

[STV4SYT]

Th unfortunate thing is that there is now going to be a lot of cars with lower specs to fit under the $57k limit. it is way too low, most decent spec people carriers fit this, so are they the underprivileged family with 9 kids will have to pay luxury car tax to ferry their family around???

[Vene]

Agree entirely........besides we're having to pay GST, LCT and stamp duty!!! A triple tax (with overlap) just to buy a CAR! (not to mention the worse of them all - income tax), and the government is wondering why there is a steady stream of skilled workers leaving the country.

[OilBurna]

good old krudd govt... sign of things to come. First alcohol taxes now this.

old chinese proverb taxing the rich does not help the poor.

whatabout the family that needs a 7 seat vehicle ie a Tarago at 65k.. Why not tax watches, boats, helicopters etc over a certain amount instead etc. They ued crap examples ie Jag S Type vs more normal every day type vehicles. At least Mr Bracks gave me some money back when I bought mine by cutting the stamp duty in Vic.

[Wolves1877]

Just shows how stupid Labour are. If you increase the price of luxury items, it creates a greater void between cheaper priced products. This then encourages the manufacturers of the lower priced products to increase their prices, whilst still retaining the same price differential as before the increase in LCT.

So in the end, all cars go up in price and that further adds to inflation... the very thing Robin Hood is supposed to be trying to reduce.

[R36 Dreamer]

good old krudd govt... sign of things to come. First alcohol taxes now this.

old chinese proverb taxing the rich does not help the poor.

whatabout the family that needs a 7 seat vehicle ie a Tarago at 65k.. Why not tax watches, boats, helicopters etc over a certain amount instead etc. They ued crap examples ie Jag S Type vs more normal every day type vehicles. At least Mr Bracks gave me some money back when I bought mine by cutting the stamp duty in Vic.

I like the fact the example Swanny used is of a superseded model - the SType is being replaced by the XF, if it hasn't already.

At the end of the day it is only a couple of hundred bucks in R36 land, but it will be interesting to see whether exotics get a bucketload of pre-orders to try and get in prior to the new tax rate (if that will work).

[OilBurna]

yes price of the GTR just went up.... damm

[richdave]

;159823']
the one thing however, i don't agree with, is the price at which the luxury car tax starts. since when is a $57,000 car a luxury car. i don't consider a toyota landcruiser a luxury car.....do you?

it should be up around $70,000 - $75,000.



I agree that the rate cuts in too early. What we need is true tax reform but NONE of the pollies, left or right, have the balls to do it.

Tax law should be simple.

Earn money = pay tax

Make it flat rate so it is equitable across the board, Apart from say a $10k taxfree threshold, NO exemptions, write off, refunds, just a simple LOWER flat rate. No need to do tax returns....

While ya'll are bagging Rudd, remember that Howard did not have the balls to abolish negative gearing which is welfare for the rich by stealth. How much of your hard earned paid in tax goes to subsidise the guy across the roads rental?

[richdave]

;159823'] i don't consider a toyota landcruiser a luxury car.....do you?

Luxury - NO, CRAP - Yes... :D

[gareth_oau]

While ya'll are bagging Rudd, remember that Howard did not have the balls to abolish negative gearing which is welfare for the rich by stealth. How much of your hard earned paid in tax goes to subsidise the guy across the roads rental?

Tax changes arent that simple.

have you ever rented a house?

With no negative gearing in place, why would people buy rental properties?thered be a lot less rental properties available, and those available would cost a whole lot more to rent.

its not about how big somebody's balls are, its about keeping a lot of people happy (which is never easy)

(ps, i dont and ive never had any negative geared properties, just expersssing an objective viewpoint!j:)

[edoom]

I think readers from this forum are being hit the hardest by the new LCT. The cars we discuss and buy here are not really that luxury... -- if you like, right on the threshold.

As for me ( I am sure similar to a lot of people here), I work very hard, earns decent salary, however all cash goes to bills and 2 investment properties, so I can only afford something cost around 65-80K. If one say, oh, 600 dollars difference is not much, no no mate, to me, that's quite a bit.

It may just be me, but I absolutely resent those yobos who on welfare and contribute virtually nothing to the society and Mr. Swan labelled them as hard working families?

To me, you are what you can make it. I have no sympathy for those who whinge on Trash Tonight about their house being repossessed because they blow all their savings before saving up; signed up for a subprime loan AND didn’t read the fine print.

[VW Convert]

While ya'll are bagging Rudd, remember that Howard did not have the balls to abolish negative gearing which is welfare for the rich by stealth. How much of your hard earned paid in tax goes to subsidise the guy across the roads rental?

Getting off topic here but........I seem to recall this was abolished during the Hawke years and guess what happened.........investors pulled out of the housing market in droves leaving a drastic shortage of rental accommodation.

I have 2 investment properties which I am subsidising hand over fist at the moment, if negative gearing was abolished I would have no choice but to sell them (almost without doubt at a loss). Even with negative gearing residential property at the moment is a dubious investment, without it, it is a certain loss maker. It would be unlikely that an investor would buy so those houses would be lost to the rental market which already has an extremely low vacancy rate.

Oh and don't forget, if I do make a profit from selling a negatively geared property CGT comes into play.

As far as LCT is concerned this government's idea of a luxury car is grossly out of kilter, threshold should be a fair bit higher to take every day cars out of the equation.

Cheers

George

[jamesatfish]

Another disappointed car buyer here - as many others have said the threshold is far too low, and justifying a tax by saying 'well those who can buy those cars can afford the extra tax' is just an insult to those who work as hard as they do in order to afford such luxuries in the first place.

As others have noted, car manufacturers put a lot of effort into determining the specification and price points for various versions of their cars. Consider the Holden Commodore - for instance the Calais V-Series. Holden have obviously taken their time to consider there is a $5000 price gap between the V6 and V8 models, the latter of which sits above the LCT threshold. If the V8 goes up $500 due to the government increasing the tax, and Holden's market research has said the V8 should command a $5000 premium, then the natural thing to do is increase the price of the V6 to keep the price gap the same.

So the 'battlers' who buy cars below the LCT threshold will end up being taxed by a similar amount - just with the revenue going to the car manufacturers, not the government.

Of course, unless I missed the changes to the fine print about what defines a 'luxury car', you can still go out and spend close to $100,000 on a HSV or FPV Ute (which, despite having leather, premium sound, massive V8 etc, is still a commercial vehicle) - not to mention the extra FBT benefits involved.

[gareth_oau]

This is a little off topic, but its a great story about paying taxes and "tax custs for the rich!!)

You've heard the cry: "It's just a tax cut for the rich!", and it is accepted as fact. But what does that really mean? The following may help.

Suppose that every day, 10 men go out for dinner. The bill for all 10 comes to $100. They decided to pay their bill the way we pay our taxes, and it went like this:

* The first four men (the poorest) paid nothing.
* The fifth paid $1.
* The sixth $3.
* The seventh $7.
* The eighth $12.
* The ninth $18.
* The tenth man (the richest) paid $59.

All 10 were quite happy with the arrangement, until one day, the owner said: "Since you are all such good customers, I'm going to reduce the cost of
your daily meal by $20." So now dinner for the 10 only cost $80.

The group still wanted to pay their bill the way we pay our taxes.

The first four men were unaffected. They would still eat for free. But how
should the other six, the paying customers, divvy up the $20 windfall so that everyone would get his "fair share"?

They realised that $20 divided by six is $3.33. But if they subtracted that
from everybody's share, then the fifth and sixth men would each end up being paid to eat. The restaurateur suggested reducing each man's bill by roughly the same percentage, thus:

* The fifth man, like the first four, now paid nothing (100% saving).
* The sixth paid $2 instead of $3 (3% saving).
* The seventh paid $5 instead of $7 (28% saving).
* The eighth paid $9 instead of $12 (25% saving).
* The ninth paid $14 instead of £18 (22% saving).
* The tenth paid $49 instead of $59 (16% saving).

Each of the six was better off, and the first four continued to eat for free, but outside the restaurant, the men began to compare their savings.

"I only got a dollar out of the $20," declared the sixth man. He pointed to the tenth man "but he got $10!"

"That's right," exclaimed the fifth man. "I only saved a dollar too. It's unfair that he got ten times more than me!"

"That's true!" shouted the seventh man. "Why should he get $10 back when I
got only $2? The wealthy get all the breaks!

"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!" The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for dinner. The nine sat down
and ate without him, but when they came to pay the bill, they discovered
that they didn't have enough money between all of them for even half of it.

That, boys and girls, journalists and college professors, is how our tax
system works. The people who pay the highest taxes get the most benefit
from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore. There are lots of good
restaurants in Monaco and the Caribbean.

[VW Convert]

If this Government had the "green credentials" it claims to have, LCT would be replaced by a tax based on the efficiency of the car rather the price of the vehicle. Less fuel consumption = less pollution = less tax.

Sorry if I sound cynical!

Cheers

George

[gareth_oau]

If this Government had the "green credentials" it claims to have, LCT would be replaced by a tax based on the efficiency of the car rather the price of the vehicle. Less fuel consumption = less pollution = less tax.

Sorry if I sound cynical!

Cheers

George

they are looking at this one as well, however, i think that the tax should be on the petrol, not on the car. If I own a big expensive V8, but never drive it, where as if you own a misely 4 cylinder, but rack up long distances, then a tax on the car itself isnt green. IMO to be effective the tax should be on the petrol

[VW Convert]

they are looking at this one as well, however, i think that the tax should be on the petrol, not on the car. If I own a big expensive V8, but never drive it, where as if you own a misely 4 cylinder, but rack up long distances, then a tax on the car itself isnt green. IMO to be effective the tax should be on the petrol

Fair comment Gareth, hard to please everyone isn't it? j:

Cheers

George

[Steve]

they are looking at this one as well, however, i think that the tax should be on the petrol, not on the car. If I own a big expensive V8, but never drive it, where as if you own a misely 4 cylinder, but rack up long distances, then a tax on the car itself isnt green. IMO to be effective the tax should be on the petrol
There's already an extraordinary amount of taxes and excises and taxes on excises on petrol, though.

I don't mind the slight increase in "luxury" car tax but $57000 is far too low for it to kick in.

[STV4SYT]

$100k i reckon is a fair starting point for it.

Although maybe, for those that have "collections" the limit lowers and the tax increases for each subsequent car. And definitely increase it for luxury (no-essential) items, as someone suggested, leisure craft, helicopter, private jets. But alas all the people that actually own all these also have the money to have accountants that will manage to minimise the tax they pay anyway.


I saw this happen a few years back when the UK government increased the cost of road taxes for trucks, a large percentage of the hauliers rented an office in southern ireland and re registered all their trucks there. guess what happened next?

[richdave]

Tax changes arent that simple.

have you ever rented a house? yes a few and have owned an investmaent place too.


With no negative gearing in place, why would people buy rental properties?thered be a lot less rental properties available, and those available would cost a whole lot more to rent.

that's why you would stage things so say over a 10 year period the deductibility reduces (Yr 1 100% of expenses, Yr 2 90% etc..) so the market and anyone with investment property can adjuast their financial situation.

Oh and people buy investment prioperty to GET RICH not for any socially minded "give the poor a house" kinda reason. They would still get the CAPITAL GAIN from owning the prioperty too so they are not lucking out.... just not being subsidised by the poor smo who has to rent their investment AND pay tax too...

Subsitise first home owners and/or home owner mortgage interest and more people could AFFORD a place and not have to rent. Shift the stock of houses from the investors portfolio to the hands of the private citizen who wants to own and live in it.

As for anyone with 2 investment properties bleating about the increase of LCT... My heart bleeeds for you

[theplanner]

I agree that the rate cuts in too early. What we need is true tax reform but NONE of the pollies, left or right, have the balls to do it.

Tax law should be simple.

Earn money = pay tax

Make it flat rate so it is equitable across the board, Apart from say a $10k taxfree threshold, NO exemptions, write off, refunds, just a simple LOWER flat rate. No need to do tax returns....

While ya'll are bagging Rudd, remember that Howard did not have the balls to abolish negative gearing which is welfare for the rich by stealth. How much of your hard earned paid in tax goes to subsidise the guy across the roads rental?

Agree, what we need is a simple tax structure. One that is equitable, so the general masses don't waste their time devising ways to minimise or in extreme cases evade taxes and the government don't have to waste taxpayers money chasing the evaders. Imagine, if it were simpler the late Kerry Packer would have paid his taxes.

Simple Tax Structure = Win Win for all
Improve productivity

[h100vw]

$100k i reckon is a fair starting point for it.

Although maybe, for those that have "collections" the limit lowers and the tax increases for each subsequent car. And definitely increase it for luxury (no-essential) items, as someone suggested, leisure craft, helicopter, private jets. But alas all the people that actually own all these also have the money to have accountants that will manage to minimise the tax they pay anyway.


I saw this happen a few years back when the UK government increased the cost of road taxes for trucks, a large percentage of the hauliers rented an office in southern ireland and re registered all their trucks there. guess what happened next?

Yeah, Eddie Stobart fitted extra tanks to his trucks so they could fill up on the continent and save money on fuel.

The UK has just had a big tax change on cars based on emissions. Not popular
Gavin

[jayjay]

mm, there'd be riots here.. my old commodore on a really really REALLY good day, sits on about.. 14l/100. i'm not to fussed cause we're moving to diesel very soon, but imagine every die hard v8 fan not being able to drive their pride and joy.. :?

[gareth_oau]

mm, there'd be riots here.. my old commodore on a really really REALLY good day, sits on about.. 14l/100. i'm not to fussed cause we're moving to diesel very soon, but imagine every die hard v8 fan not being able to drive their pride and joy.. :?

14 Jayjay? 14? i dreeeeam of getting 14j: My main drive is a 375KW FPV GT-P, and I average 19L/100, and sometimes get instantaneous readings of 99.9L/100:D

[richdave]

Simple Tax Structure = Win Win for all
Improve productivity

Amen Brother!!! Although there are a lot of accountants anw lawyers who make their living from our complex and inefficient tax laws... We can always re deploy them to something useful.... like fish food j:

[neil]

We all pay Luxury car Tax, it doesn't matter what type of car you own.

How many 100's of statemans are running around Canberra for the follies.
Its the general public which will foot the bill for their privilege.:?

[R36 Dreamer]

We all pay Luxury car Tax, it doesn't matter what type of car you own.

How many 100's of statemans are running around Canberra for the follies.
Its the general public which will foot the bill for their privilege.:?

With the fleet discounts the govt gets, I reckon a statesman would be under LCT, though Caprices are a different story.

[tezza]

Me too I signed the contract for my T-Rex last month delivery in August guess this increase throws the $total out the window as I am sure the contract will state if taxes are incresed etc etc. My thoughts on the LCT ok we have to pay it :( but why not keep this one as is and put it up to 30% for those vehicles over $100k

[hgonops]

That's what you get when you vote Labor.
The Libs always looked after car enthusiasists, and our hip pocket.

[jayjay]

i'm glad that in having a mk2, my biggest cost will be rego/insurance! j:

is the system in the uk that carbon trading scheme? or is that only for energy production/commercial businesses? that idea of tax:fuel consumption set ratio is awesome.


My main drive is a 375KW FPV GT-P, and I average 19L/100

that makes it marginally ok... :D

[gareth_oau]

That's what you get when you vote Labor.
The Libs always looked after car enthusiasists, and our hip pocket.

ummm the Luxury Car Tax was introduced into parliament originally by Peter Costello in 1999

(ps, i'm an avid liberal capitalist!!, just wanted to have the facts out there)

[ranton-inc]

and the government is wondering why there is a steady stream of skilled workers leaving the country.

lol
we have the same problem here except all ours are gapping it over you you guys..

no body wants to move to NZ except Refugees and Beneficiarys..

[snodrogs]

Oh and people buy investment prioperty to GET RICH not for any socially minded "give the poor a house" kinda reason. They would still get the CAPITAL GAIN from owning the prioperty too so they are not lucking out.... just not being subsidised by the poor smo who has to rent their investment AND pay tax too...




I cannot speak for all people who purchase investment properties Richdave, but I purchased (ie. am paying off) my investment properties so that when the Govt of the day eventually sh#t-cans the pension, my wife and I have some sort of financial security that means we are not going to "exist" on bread and water for the remainder of our lives. Not to get rich quick... And in the meantime it places a safe and warm roof over somebody's head, terrific...


Is anybody else getting sick of hearing the media talk about "working families" only being those who are under the new magical $150k income threshold?? I would hazard a guess that to have that sort of income, they too would have to "WORK". I don't think the fairies drop the money down the chimney anymore... j:

I'm just waiting here quietly for my new Passat Wagon, which is NOT subjected to LCT. :)

[gareth_oau]

very true snodrogs, and as I said in my ealier posts "there are plenty of good restaurants in monaco or the Carribean" If housing no longer became an attractive investment, people would jump ship and throw their money into shares or other investments, or perhaps even into another country altogether.

Yes, some of that taxc refund could go to lower income peeople as sbsidies to buy houses, but a lot of others will still need to rent, and yet there would be very few rental properties around. furthermore, rental agents would become unemployed - a catch 22 situation.

theres no perfect solution eitrher way.

i'm putting lots into a decent super fund, so hopefully it wont go bankrupt and the govt wont change the rules too many times before i retire.

and in the meantime, i spend the balance on nice cars, good holidays etc - and enjoy it incase i die and never get to spend the super!!j:

[imike]

the one thing however, i don't agree with, is the price at which the luxury car tax starts. since when is a $57,000 car a luxury car. i don't consider a toyota landcruiser a luxury car.....do you?

it should be up around $70,000 - $75,000.

Cheers,
Rhys[/QUOTE]


I could not agree more - when this tax was introduced, a 3-series BMW was not considered a "luxury car" by definition of the tax.

Now all but the base models of most family cars are considered "luxury".

Seems to me that this government are kicking the very people they are pretending to help - but busy pointing at "the rich" like some kind of pantomime.

Seems the only way around it is (if you're not rich & wearing a top-hat and twiddling your mustache) you should buy an old inefficient car. Safety and efficiency are only for the RICH! (boo-hiss!)

[richdave]

I cannot speak for all people who purchase investment properties Richdave, but I purchased (ie. am paying off) my investment properties so that when the Govt of the day eventually sh#t-cans the pension, my wife and I have some sort of financial security that means we are not going to "exist" on bread and water for the remainder of our lives. Not to get rich quick... And in the meantime it places a safe and warm roof over somebody's head, terrific...

I cannot argue with your rationale and good on you for being aboe to invest but I still donot agree that you should be able to negative gear which equates to subsidisation.. Fair enough to offset your outgoings agains any income from the investment to lower tax but to offset costs above income of investment is IMO a stupid policy. The Government should put a stop to it (phased in over time).

I remember some saying the world would disapear up a camels butt if the GST was introduced... it didn't!!!

I remember some saying that the OZ dollar would never get to parity with the US dollar again... it's almost there...

The rental market and investing in property will not collapse if the Government abolishes the rort for the werathy called negative gearing. Yes things may shake up a little and change but prolly no drastic effects long term.

[VW Convert]

I cannot argue with your rationale and good on you for being aboe to invest but I still donot agree that you should be able to negative gear which equates to subsidisation.. Fair enough to offset your outgoings agains any income from the investment to lower tax but to offset costs above income of investment is IMO a stupid policy. The Government should put a stop to it (phased in over time).

I remember some saying the world would disapear up a camels butt if the GST was introduced... it didn't!!!

I remember some saying that the OZ dollar would never get to parity with the US dollar again... it's almost there...

The rental market and investing in property will not collapse if the Government abolishes the rort for the werathy called negative gearing. Yes things may shake up a little and change but prolly no drastic effects long term.

Are you suggesting that all businesses not be able to offset borrowing costs against profits? How about the raft of taxes we investors pay? Stamp duty on the mortgage, stamp duty on the purchase of the property, council rates, water rates, stamp duty on the insurance of the property, land tax etc etc.

Cut out negative gearing, the already dubious investment becomes a liability and investors will bail out in droves just as they did when the Hawke government did away with negative gearing. Would you invest where there is no return? Governments will then have to step in and build public housing........we've seen how that works in the past......and who will subsidise that?........the taxpayer.

As for being referred to as "the wealthy", I'm far from that, just an average man who is trying (but not succeeding) to make himself independent when he eventually retires......my guess is that if we were in France during the revolution you would have me marched down to Place de La Concorde for an appointment with the guillotine! j:

Cheers

George

[gareth_oau]

negative gearing is just a fancy name for overall investment. if a business is making money it pays tax, if one division is making money and yet another is losing money, it consolidates its revenue, and pays tax on the net income.

if an individaul has a job - he/she pays tax. however if he/she has other investments which are making a loss, then he/she can consolidate revenue and pay the net tax.

this is the principle of negative gearing, it allows indivuals to consolidate revenues and losses.

Of course, the investor will pay a very large amount of tax when the investment ripens (in theory) in due course - so its not a subsidy,its recognising short term losses vs longer term capital gains.

what you are suggesting is that nobody should be able to claim losses? you pay tax on the gains, but wear all the losses? this is hardly a balanced argument.

[rark]

How about the raft of taxes we investors pay? Stamp duty on the mortgage, stamp duty on the purchase of the property, council rates, water rates, stamp duty on the insurance of the property, land tax etc etc.

George

These taxes are not Federal. Stamp duty is a state tax, and rates are a local tax.

The Federal government is not going to reduce LCT, or income tax..... just because the State government is slogging us with stamp duty etc

[OilBurna]

Vic Govt actually cut stamp duty just over a year ago. Saved me about $600 on the Passat, changed the day before I took delivery.

[VW Convert]

These taxes are not Federal. Stamp duty is a state tax, and rates are a local tax.

The Federal government is not going to reduce LCT, or income tax..... just because the State government is slogging us with stamp duty etc

Yes absolutely true and I was aware of that. I was making a point in regards to the statements that were made regarding negative gearing which of course are off topic.

The point I was making was that whilst property investors do receive a tax deduction for their expenses they also make contributions in other ways. If negative gearing was eliminated and property investors bailed out, those taxes would not be collected and both State & Federal governments would then find someone else to slug.

Cheers

George