As of 1 July 2000, a luxury car tax will apply to luxury cars with a retail price (inclusive of GST) above the luxury car tax threshold ($55,134 for 1998/1999, which is the car depreciation limit for

income tax purposes). The LCT is to be introduced at the rate of 25% so as to equate the reduction in price from the abolition of WST.

The 25% rate will be applied to the GST exclusive value of the vehicle above the luxury car threshold.

Business will not be able to obtain an input tax credit for the LCT.