Member Q&A: “Workhorse” cars above the luxury car tax threshold

Question

We purchased “workhorse” vehicles such as dual cabs which are above the luxury car tax threshold of $76,950 in the 2023/24 income year. These vehicles are within the ATO guidelines for exempt vehicles – i.e. not principally designed to carry passengers and minor, infrequent and irregular private use excluding home to work travel. However, do they become subject to FBT because they are above the luxury car tax threshold?

Answer

The luxury car tax (LCT) threshold has no bearing on the ability for these type of vehicles to qualify for FBT exempt status.

The LCT threshold is however a condition to be met in order to access the new exemption for zero & low emission vehicles in section 8A of the FBT law.

For such vehicles (being ‘fuel efficient vehicles’) the section 8A threshold in the 2023/24 income year is $89,332.

Interestingly, it is our understanding ‘workhorse’ type vehicles that are not principally designed to carry passengers are generally classed as commercial vehicles for LCT purposes, and therefore may be exempt from LCT!

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