In Budget 2021, the government proposed the introduction of a tax on the sale of new luxury cars and aircraft with a retail sale price over $100,000, and new boats over $250,000. The tax would be calculated at the lesser of 20 per cent of the value above these price thresholds or 10 per cent of the full value of the luxury vehicle, aircraft or vessel.
To implement this commitment, today the government released for public comment draft legislative proposals. The draft legislative proposals reflect, and respond to, input received during consultations with stakeholders.
The draft legislative proposals released today build on, and replace, the backgrounder that was released on August 10, 2021, as part of the consultation on the proposed Luxury Tax.
Two notable new provisions contained in these draft legislative proposals are as follows:
- relief is proposed to be provided to after-sale improvements that are made to vehicles, aircraft or vessels purchased below the relevant price threshold; and
- relief for aircraft is proposed to be expanded to take into account qualifying flights that are conducted in the course of a business with a reasonable expectation of profit.
Subject to Parliamentary approval, this tax would come into effect on September 1, 2022.
