Luxury car tax (LCT)

⌘K

GlossaryUpdated 10 July 2026

Luxury car tax is a 33 percent tax on the portion of a car's price above the LCT threshold, with a higher threshold for fuel-efficient vehicles that also acts as the price cap for the electric car FBT exemption.

For fleets, LCT matters twice. It adds cost to vehicles above the threshold, and the fuel-efficient threshold ($91,387 for 2025-26, $91,661 for 2026-27) is the eligibility test for the FBT electric car exemption: if LCT was ever payable on the car, the exemption is off the table.

Thresholds are indexed every 1 July, so the year the car was first held matters.

Last updated 10 July 2026General information, not tax or legal advice.

Related terms

Keep reading.

Neighbouring terms from the fleet glossary.

Fringe benefits taxFringe benefits tax is the tax an employer pays when a work car is available for an employee's private use, calculated on the car's value or its running costs and paid by the employer, not the driver.FBT
Novated leaseA novated lease is a three-way agreement where an employee leases a car, the employer takes over the payments from pre-tax salary, and the car becomes a fringe benefit the employer accounts for.

Put the term into practice.

See how IntelliTrac captures the relevant checks, trips and supporting data during normal work. Bring your scenarios.

Book a DemoBook a DemoBook a Demo Explore SolutionsExplore SolutionsExplore Solutions

IntelliTrac provides fleet, telematics and field-operations software in Australia. Call 1300 767 492.