Luxury car tax relief for farmers and tourism operators
The Government announced it will provide increased luxury car tax refunds to primary producers and tourism operators on vehicles purchased on or after 1 July 2019. Eligible primary producers and tourism operators will be able to apply for a refund of luxury car tax of up to $10,000, more than tripling the current maximum refund of $3,000.
The eligibility criteria and types of vehicles eligible for the refund will remain unchanged. The definition of primary producers and tourism operators has also not changed.
To determine relief eligibility, primary producers are defined as those carrying on a primary production business, including a business of:
- Cultivating or propagating plants, fungi or their products or parts
- Maintaining animals for the purpose of selling them or their bodily produce
- Manufacturing dairy produce from raw material that you produced
- Felling trees in a plantation or forest.
Tourism operators can claim the refund on vehicles that will be used solely for business purposes, where the principle purpose of the business is carrying tourists for tourist activities. A tourist activity includes an activity that is a leisure activity of a touring nature and does not involve transporting passengers by taxi or limousine for fares or by a hire car service.
While BDO considers the increased refunds for primary producers and tourism operators as positive, the Government has ignored calls for the abolition of luxury car tax. When luxury car tax was introduced in 1999 it was viewed as an attempt to protect Australia’s car manufacturing industry. Since this industry has ceased to exist, the rationale for continuing to impose luxury car tax is questionable.
If luxury car tax is to remain for the foreseeable future (which looks likely), the thresholds should be increased to better reflect the value of luxury vehicles, and to prevent the tax from impacting families purchasing SUVs, electric vehicles and the like.