Prime Minister Anthony Albanese announced a brand new Australia-European Union Free Trade Agreement today, with big changes set to affect the new-car industry – and Australian buyers.
In keeping with the Federal Government, negotiations have resulted within the establishment of a brand new category under the Luxury Automobile Tax (LCT) for zero-emissions vehicles, with the tax threshold to be set at $120,000.
Under the outgoing rules for the 2025-26 financial 12 months, fuel-efficient vehicles – which incorporates all cars with a combined fuel consumption rate under 3.5 litres per 100 kilometres, in addition to zero-emissions vehicles – can be taxed 33 per cent for every dollar above $91,387.
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Moreover, a broadstroke five per cent tariff on all European cars imported to Australia may also be axed under the brand new trade deal, leading to cheaper models from the bloc – irrespective of what the powertrain.
Nevertheless, European automakers aren’t the one ones to learn, with the brand new LCT mandate believed to increase to all electric vehicles (EVs).
“The removal of the five per cent tariff on EU-sourced vehicles will improve affordability and increase competition within the Australian market,” said James Voortman, CEO of the Australian Automotive Dealer Association.
“While the introduction of a better LCT threshold for electric vehicles provides some profit, it’s a narrow change that may only affect lower than one per cent of vehicles sold and doesn’t address the elemental flaws of the tax,” he said in a written statement.
It’s understood negotiators from the European Union were pushing for the LCT to be scrapped entirely, based on the Australian Financial Review.
Exact details of the great free-trade agreement have yet to be published, nevertheless the federal government claims the accord “means tradies and buyers of European vehicles will profit from cheaper European cars”.
Under the Australia-European Union Free Trade Agreement, the Australian Government says 98 per cent of the present value of Australia’s exports will now enter the EU duty free with tariffs eliminated on just about all agricultural products, and tariff rate quota volumes expanded for various exports comparable to beef and rice.
“Just about all” manufactured goods and mineral resources exported to the EU may also face zero import tariffs, while in Australia most tariffs will probably be removed on EU imports comparable to wine and chocolate.
While negotiations have been finalised – after formally starting in 2018 – the deal must now undergo formal ratifications through Australian and European authorities before it’s implemented.
This Article First Appeared At www.carexpert.com.au
