The luxury car tax threshold has been increased for the 2020-21 financial year, representing the first rise in five years.

The threshold has increased from $67,525 to $68,740, while the threshold for vehicles classified as fuel-efficient (consumes less than 7 litres of fuel per 100km) has also risen, from $75,526 to $77,565.

Any vehicle purchased for a value above the threshold will incur a tax rate of 33 per cent.

The luxury car tax has been a controversial topic in recent times, with the recent demise of Holden bringing about renewed calls to scrap the tax entirely.

Introduced in the year 2000, the luxury car tax was brought in to protect local manufacturers by adding a tax to imported luxury vehicles.

However, with Australia no longer having a domestic car manufacturing industry to protect, the need for the tax has been questioned.

Source: Savings.com.au | Luxury car tax threshold gets bumped for 2020-21

2 July 2020