The federal government has published its draft legislation to see Luxury Car Tax scrapped on vehicles restored overseas and brought back into Australia.
Cars which have previously resided in Australia and are sent abroad for restoration costing (or vehicle value) over the LCT threshold of $66,331 (2018-19 financial year), were subject to the charge when shipped back home.
Vehicles, according to the government’s exposure draft, will see removed the”inconsistency in tax treatment of refurbished cars in order to align with Australia’s trade obligations with its foreign trading partners.”
Australasian New Car Assessment Program (ANCAP) chief executive James Goodwin says the LCT scrappage is great for the small number affected, but misses the target virtually every peak body in the Australian automotive industry is calling for.
“The bigger concern is that LCT is still being applied to tens of thousands of the safest and most technologically advanced vehicles on Australian roads,” he tells AutoTalk.
“This is a sensible move to address what I would describe as an administrative oversight and will be welcomed by the small number of people who would have been impacted,” Goodwin explains.
ANCAP says it is still waiting for the impost on new cars to be taken seriously as the nation’s road toll sits at 1222 for the year ending June 2018.
“It (Luxury Car Tax) is quite simply a tax on safety and innovation,” Goodwin continues.
“Even when the tax is not applied to vehicles, its existence can reduce the standard of safety equipment fitted to vehicles at the LCT threshold price point, which is a very poor outcome for the whole community.”
The Australian Automotive Aftermarket Association (AAAA) welcomes the changes but admits, “it’s not everything we hoped for, but it’s a start,” says executive director Stuart Charity.
“Essentially some consumers were being double-hit by GST and LCT and this revision is a step in the right direction,” he says.
Concerns were raised by the Australian Historic Vehicle Interest Group which submitted to the treasury earlier this year that, as an example, historic vehicle events like Motorclassica, which “delivers an economic impact of A$9.
2m to Melbourne over four days” was concerned about the “ever diminishing pool of cars” caused by LCT.
The AHVIG surveyed 410 members who jointly own $21 million worth of restored vehicles stored here and overseas that are worth more than the threshold.
As a result, AHVIG told “the Government would earn at least $4,394,000 in GST on the importation” of those vehicles.
AHVIG member and also former AAAA executive director David Wright told AutoTalk the financial impact of LCT may not be what the wider new car industry wants, but the impost has been bigger than it seems.
“The latest amendment will effect very few vehicles, but its impact was significant on high-value vehicles where LCT was applicable to the current market upon re-entry to Australia after specialised repairs or restoration,” he says.
Wright explains that the result is good for the classic car sector, but it’s still not perfect.
“Disappointing was the Government’s response to our submission, saying the LCT was introduced to correct an inequity that applied when the GST was introduced in 2000,” he says.
“What this explanation completely overlooked was that wholesale Sales Tax has never been applicable to second-hand cars and historic vehicles are clearly second-hand,” Wright explains.
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