Minimising your Tesla Luxury Car Tax

 

Australia has an interesting policy. If you want to purchase a Patek Philippe, Richard Mille or even a yacht, you’re free to do so and not pay a Luxury Goods tax. You want to purchase a car on the other hand, that’s a different story. At this moment (Feb 2016), luxury car tax applies at 33% for every dollar over:

  • $63,184 for cars with a fuel usage above 7L/100km
  • $75,375 for cars with fuel usage under 7L/100km.

That is it!

So if you buy a car that is worth $175,375 and is fully electric, you’ll have to pay:

  • $33,000 in Luxury Car Tax (LCT). This will bring the car total to $208,375 (before stamp duty)

Some may find this to be fair some won’t but the truth remains that cars are the only product that attracts such a tax.
Another very interesting aspect of the LCT is that it applies on the price of the car before stamp duty. So, yes, you read that right, you’ll end up paying stamp duty tax on the luxury car tax.
There is a very simple way to minimise you LCT: at ordering time, leave out any and every single option that can be retrofitted. Example of features that can be retrofitted:

  • autopilot
  • dual chargers
  • wheels
  • spoiler

Also when you do the calculation on the cost of the non-retrofittable  option, please don’t forget to add the 33% tax (and stamp duty on top of that if applicable) for the cost of the option. As an example, a carbon fiber dashboard option rises your final price by $2,046not $1,500. For some, this may not matter but it’s good to realise that the true cost of your option is only shown in the car’s full price, and not in the option price.

Sometimes, purchasing the option at ordering rather than aftermarket may cost you more for less, as in the example below.
Worked example:

  • Model S 70D base price in NSW: $138,811.
  • Model S 70D with one option: 21′ turbine wheels: $148,093.
  • 21′ turbine wheels price at ordering time: $6,800 + tax.

This means that, if you purchase the 21′ wheels with the car, you pay $9,282. If you purchase the 21′ wheels after you purchase the car, you pay aftermarket price – $7,200 and you get the original set of 19′ wheels and tyres (valued at $2,781) for free.

Therefore your options are:

  • $0 for 19′ standard rims and tyres
  • $7,200 for 21′ turbines and tyres + 19′ standard rims and tyres.
  • $9,282 for 21’turbines and tyres.

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