From 1 January 2020, primary producers can claim a refund of luxury car tax (LCT) they have paid on one eligible vehicle per financial year, up to a maximum of $10,000 (it used to be $3,000), for vehicles delivered to them on or after 1 July 2019.

If your client lodged a claim for an eligible vehicle delivered on or after 1 July 2019, they won’t need to make another claim to receive the increased refund amount.

From 1 January 2020 when the law comes into effect, the ATO should adjust your client’s refund based on the amount they have already received.

If an eligible vehicle was delivered to a primary producer on or before 30 June 2019, they can only claim a refund of 8/33 of the LCT they have paid, up to a maximum of $3,000. This factor (eight thirty-thirds) represents the difference between the current LCT rate of 33% and the previous 25% rate.

Credits and refunds
Credits for luxury car tax (LCT) can only be claimed if your client is not registered for goods and services tax (GST). A refund may be available if they’re a primary producer or tourism operator who buys luxury vehicles.

Credits
If your client is not registered for GST, and therefore can’t make an LCT adjustment on a business activity statement (BAS), they may however be entitled to a credit for LCT paid if:

• they overpaid LCT on a sale – that is, the supplier paid an amount of LCT that was not legally payable and your client settled on that overpaid LCT
• they’ve paid LCT on a sale, or paid LCT on an importation, where they could have quoted but were unable to quote because they were unregistered at the time of supply or importation
• they’ve exported a luxury car (on which LCT has been paid) that is a GST-free export.

Your client is entitled to a credit only if no-one else has made a valid claim for a credit in relation to the credit entitlement. Note this claim for a credit must be made within four years of becoming entitled to the credit.

Claiming a credit for LCT
To claim a credit for overpayment of LCT:

• on a sale, your client must use the approved Application for luxury car tax credit – entities not registered for GST form, and lodge it within four years of becoming entitled to the credit
• on a GST-free export, they must make a claim to the Australian supplier.

Refunds
Primary producers and tourism operators can claim a refund of the LCT they have paid on eligible vehicles they have purchased or leased in a financial year.

An eligible vehicle is a four wheel drive, or all-wheel drive, and is either:

• a “passenger car” with a ground clearance of at least 175mm
• an “off road passenger” vehicle.

Primary producers
As mentioned, from 1 January 2020 primary producers can claim a refund of LCT they have paid on one (our emphasis, see below) eligible vehicleper financial year, up to a maximum of $10,000, for vehicles delivered to them on or after 1 July 2019.

For LCT purposes, a primary producer is an individual, partnership, trust or company carrying on a primary production business, including:

• plant or animal cultivation
• fishing or pearling
• tree farming or felling.

If an eligible vehicle was delivered to a primary producer on or before 30 June 2019, they can only claim a refund of 8/33 of the LCT they have paid, up to a maximum of $3,000.

Tourism operators
From 1 January 2020 tourism operators can claim a refund of LCT they have paid for each (our emphasis) eligible vehicle, up to a maximum of $10,000, delivered to them on or after
1 July 2019.

For LCT purposes, a taxpayer is a tourism operator if both the following apply:

• they use the car solely for the purpose of carrying on a business
• the principal purpose of their business is carrying tourists for tourism activities.

Tourism activities must be both leisure activities and of a touring nature.

A leisure activity includes activities involving a visit by a tourist to a site that has one of the following:

• scenic beauty
• cultural interest
• environmental interest
• historical interest
• recreational interest.

Carrying tourists for tourism activities does not include transporting passengers by either:

• taxi or limousine for fares
• a hire-car service.

If an eligible vehicle was delivered to a tourism operator on or before 30 June 2019, they can only claim a refund of 8/33 of the LCT they have paid, up to a maximum of $3,000.

Claiming the refund
Your client can claim a refund on the Application for luxury car tax refund – for primary producers and tourism operators form. This refund must be claimed within four years of becoming entitled to it.

If your client has lodged a claim for an eligible vehicle delivered on or after 1 July 2019, they won’t need to make another claim to receive the increased refund amount.

From 1 January 2020 when the law comes into effect, the ATO will adjust their refund based on the amount they have already received. Note that they can’t claim these refunds on their BAS or from the Department of Home Affairs.