Treasury has released draft legislation that proposes to amend the way the Luxury Car Tax (LCT) applies to fuel-efficient vehicles.
Proposed to take effect from 1 July 2025, the amendments encourage the uptake of electric vehicles to reduce Australia’s greenhouse gas emission targets.
Under the current LCT regime, a higher threshold applies to fuel-efficient vehicles, and a lower threshold to all other luxury vehicles.
The Government is proposing to tighten the definition of a fuel-efficient vehicle so that only electric and partially electric vehicles can access the higher threshold. Under the amendments, the maximum fuel consumption for a vehicle to be considered fuel-efficient will be halved from the current 7 litres per 100 km, to 3.5 litres per 100 kilometres.
