Luxury Car Tax
As announced in this year’s Federal Budget the Government is proposing an increase to Luxury Car Tax from 25% to 33% as at 1st July 2008.
The Senate has requested an inquiry into the Luxury Car Tax increase and are expecting to report back not before the 26th August 2008. After the inquiry should the Senate pass the bill the Government has confirmed that it will apply the increase retrospectively from the 1st July 2008.
The ATO have released an administrative advice outlining two options available to suppliers of luxury cars:
Option 1: collect the increased amount of luxury car tax ("LCT") from 1 July 2008, continue to remit LCT calculated at the old rate until the new legislation is enacted. Once enacted, suppliers need to remit the additional LCT collected in the next BAS.
Option 2: alternatively, suppliers may elect to not collect the increased LCT from 1 July 2008 and instead collect and remit the additional tax once the legislation is enacted (provided their agreements with customers allow the later collection of the additional LCT).
The ATO will not impose penalties provided the additional LCT is remitted to the ATO in the first BAS after the legislation is enacted.
Custom Fleet will pay the additional LCT to suppliers from 1 July 2008. If the amending legislation is not effected, Custom Fleet will seek an immediate refund of the overpaid LCT from motor vehicle dealers and adjust drivers' accounts accordingly.
If you have any questions regarding this increase please contact Custom Fleet on 1800 812 681.