- Luxury cars that are not economical enough will receive a tax increase
Australians who buy a luxury car will have to pay a 33 percent tax unless it is highly fuel efficient, meaning SUV drivers are particularly at risk.
The Treasury’s mid-year update showed that cars costing between $76,950 and $89,332 would have to pay the luxury car tax unless the vehicle consumed less than 3.5 liters per 100km.
The existing rules ensure that economical luxury cars escape the 33 percent tax if a car consumes less than seven liters per 100 km.
But Labor is now tightening the definition of a fuel-efficient luxury car in a bid to raise a further $330 million in 2023-2024.
Australians who buy a luxury car will have to pay a higher tax rate unless it is very fuel efficient (pictured is a Land Rover Defender)
The Mid-Year Economic and Fiscal Outlook forecasts that luxury car taxes will raise $1.2 billion this fiscal year, compared to a forecast of $870 million in the May budget.
Under existing rules, the luxury car tax for economy cars is $89,332, but the threshold for all other cars is $76,950.
The rules are aimed at encouraging more Australians with money to buy an electric and hybrid luxury car instead of a petrol or diesel car.
Someone buying a Land Rover Defender is already taking a hit because prices start at $90,400.
