ATO Guidance on Determining the Principal Purpose of a Car for Luxury Car Tax (LCT)
Insights into Assessing LCT Liability for Vehicles Used for Carriage of Goods versus Passengers
The ATO recently explained how to determine the principal purpose of a car for ‘luxury car tax’ (‘LCT’) purposes (since LCT is not payable on the supply or importation of cars whose principal purpose is the carriage of goods rather than passengers).
Broadly, a luxury car (i.e., a car subject to LCT) is a car whose LCT value exceeds the LCT threshold. However, a commercial vehicle that is not designed for the principal purpose of carrying passengers is specifically excluded as a luxury car.
The ATO’s new determination sets out various factors to be considered in determining the principal purpose of a car, as well as factors to consider when assessing a car’s modifications.
The determination states that commercial vehicles are unlikely to have the body types of station wagons, off-road passenger wagons, passenger sedans, people movers or sports utility vehicles, and the supply of these vehicles for an amount above the LCT threshold without LCT being paid may well attract the ATO’s scrutiny.
Contact Omnis Group Business Accountants in West Perth if you need more information about vehicle FBT. Omnis Group are modern, forward-thinking Business Accountants providing practical, proactive, real-world advice and support that goes beyond the basic preparation and lodgement of tax returns, to identify opportunities for improvement in your business.
