Luxury car finance for business owners. How the car limit, luxury car tax and GST credits change the numbers, and what lenders test on a high value car.
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Luxury Car Finance · Car Limit · Luxury Car Tax
Luxury car finance for a business uses the same products as any other car, but the car limit, luxury car tax and the GST credit cap change the numbers. Here is how each one works and what lenders test on a high value car.
Quick Answer
Luxury car finance for a business is usually a chattel mortgage, lease or hire purchase on a high value car. Lenders test the business and the car. The car limit and luxury car tax then decide what the car costs and what the business can claim.
Also called: prestige car finance, high value car loan. All three labels describe finance on a car at the upper end of the market. None of them is a separate product.
What is luxury car finance for a business?
Luxury car finance for a business is finance for a car priced above the luxury car tax threshold, and it uses the same products as any other business car. The usual choices are a chattel mortgage, a finance lease or commercial hire purchase, and our guide to choosing between them covers that decision.
What changes is the arithmetic around the car. As the price climbs, three things come into play: a cap on the value used for depreciation, a cap on the GST credit, and a tax on part of the price. A high value car can pass every lender test and still produce a smaller claim than the owner expected.
The business.gov.au guide to leasing or buying vehicles sets out the general trade-offs for any business vehicle. This post deals with the numbers that apply at the top of the market. For the wider range of cars, utes and vans, start with vehicle finance or the Business Owners Hub.
What do lenders test on a high value car?
Lenders test whether the business can carry the repayments and whether the car will hold enough value to secure the loan. From the underwriter's seat, a higher price raises the stakes on both. The points below are general, and each lender sets its own policy.
- Capacity to repay. Trading history, income evidence and existing debts carry more weight as the repayment grows. A larger loan may need more documents than a smaller one, which can close off a low doc path.
- Loan size, varies by lender. Lenders set their own caps for each level of documents. Ask early whether the amount fits the path you are on.
- Vehicle age limit, varies by lender. Some policies limit how old a car can be at the start or the end of the term. This matters most on older prestige cars.
- Value and resale. The lender wants confidence in what the car would fetch if it had to be sold. Rare, modified or imported cars can be harder to value than a current model from a dealer.
- Who stands behind the loan. A company borrower commonly means a director's guarantee, so the director's own position is part of the file.
Pricing sits apart from these tests. Our chattel mortgage rates guide covers what you pay, and the post on the comparison rate explains how to read a quoted figure. If you are weighing up where to take the deal, see lender types for ABN holders.
What is the car limit for 2026-27?
The car limit for 2026-27 is $69,883. It is the maximum value used to work out depreciation on a vehicle used for business and first used or leased in 2026-27. It applies to a car designed mainly to carry passengers, with limited exceptions. You can pay more for a car, but the amount above the limit does not go into that calculation.
The table puts the 2026-27 figures in one place. They are ATO regulatory figures, not market estimates.
| Item | Figure | What it does |
|---|---|---|
| Car limit | $69,883 | The maximum value used to work out depreciation on a vehicle used for business and first used or leased in 2026-27. |
| Maximum GST credit | $6,353 | Generally one-eleventh of the car limit if you buy a vehicle for more than the limit. Exceptions exist, including a commercial vehicle not designed for the principal purpose of carrying passengers. |
| LCT threshold, fuel-efficient | $91,661 | Luxury car tax applies to the amount over this threshold on a fuel-efficient car. |
| LCT threshold, other | $80,809 | Luxury car tax applies to the amount over this threshold on any other car. |
| LCT rate | 33% | Applied to the amount over the threshold after taking GST out (10/11). |
Sources: ATO, Car thresholds from 1 July, published 9 June 2026. ATO, Purchasing a motor vehicle, last updated 3 June 2026. ATO, Luxury car tax rate and thresholds, last updated 1 June 2026. All read 4 November 2026.
Depreciation rates and effective life are covered in our business vehicle depreciation schedule.
How does luxury car tax change the price?
Luxury car tax raises the price of the car at a rate of 33% on the amount over the threshold, and it does not apply to the whole price. The ATO's formula is (LCT value minus threshold) x 10/11 x 33%, because the value includes GST. On its own example, a car with an $88,000 value carries $2,157.30 of luxury car tax against the $80,809 threshold (ATO, Working out the LCT on a sale, updated 1 June 2026, read 4 November 2026).
Which threshold applies depends on whether the car counts as fuel-efficient. From 1 July 2025 that means combined fuel consumption not exceeding 3.5 litres per 100 kilometres (ATO, Definitions for luxury car tax, updated 1 April 2025, read 4 November 2026). A separate $120,000 category for zero emission vehicles is proposed from 1 July 2027, subject to legislation (DFAT, Australia and EU exchange of letters, read 4 November 2026).
On a sale, the LCT value generally includes accessories, modifications and treatments fitted at or before delivery. It leaves out stamp duty, registration, compulsory third party insurance, extended warranties and finance costs. So the extras on the order can matter as much as the base model.
You cannot claim a credit for luxury car tax, even if the car is used for business, according to the ATO's Purchasing a motor vehicle page cited above. That part of the price stays a cost. Luxury car tax can also matter on an electric car: a condition of the ATO's electric cars exemption (last updated 1 April 2026, read 4 November 2026) is that luxury car tax has never been payable on the car. Finance on those cars is covered in our electric car finance post.
From the underwriter's seat, luxury car tax is part of the price the finance has to cover. How much of that price a lender will fund varies by lender, so ask before you sign the contract of sale.
What can a business claim on a luxury car?
A business can generally claim the business share of a car's costs, with depreciation and the GST credit capped by the car limit. The ATO says you can claim interest on a motor vehicle loan, lease payments and depreciation for a vehicle used in running your business, for the business share (last updated 27 May 2026, read 4 November 2026). The vehicle must be owned, leased or under a hire-purchase agreement, and a lease above the car limit works differently, as the next section shows.
The instant asset write-off will not cover a luxury car. Each asset must cost less than $20,000 and the test uses total cost, so a car at or above that amount fails it. For a small business using simplified depreciation it goes to the small business pool instead, at the car limit times the business share (ATO, updated 28 August 2026, read 4 November 2026).
To see how the figures work on a specific car, run them in this order:
- Find the luxury car tax in the price. Compare the car's value with the threshold that applies. Apply (value minus threshold) x 10/11 x 33%. Confirm the figure on the dealer's invoice.
- Compare the cost with the car limit. If the car costs more than $69,883, depreciation is worked out on the limit and not the full cost.
- Cap the GST credit. If you buy for more than the limit, the maximum credit is generally $6,353. A credit needs GST registration, a tax invoice and business use.
- Apply the business share. If you use a vehicle for both business and private use, you can only claim the business portion and must be able to justify the percentage.
- Take the result to your accountant. The steps show how the rules fit together. They are not a tax position for your business.
Does leasing a luxury car get around the limit?
Leasing does not get around the car limit for depreciation, but it does change the GST position. A leased car is generally a luxury car if its cost exceeds the car limit for the income year the lease is granted. A luxury car lease, other than a genuine short-term hire or a hire purchase agreement, is treated as a notional sale and loan. The lessee is generally treated as the holder and can claim the decline in value, and part of the finance charge may be deductible.
That treatment comes from the ATO's Guide to depreciating assets 2026, updated 30 May 2026, read 4 November 2026. The guide prints the 2025-26 limit, so use the 2026-27 figure in the table above.
The GST line is where a lease differs. If you lease, the GST credit on lease payments is not limited to one-eleventh of the car limit, according to the same Purchasing a motor vehicle page. That alone does not make a lease the better choice, because a lease also brings a residual value and its own end of term. The post on finance lease and operating lease covers how those two differ.
When is a prestige car a genuine business asset?
A prestige car is a genuine business asset when the business actually uses it to earn income and the records show it. Price alone does not settle the question. A car that carries clients, staff or stock is in a different position from one that mostly sits at home, and a logbook is the usual way to show the difference.
From the underwriter's seat, the question is whether this car makes sense for this business at its current size. These are general patterns, not lender rules.
Stronger fit
- Regular business travel that records support
- Trading history that covers the repayment
- A dealer sale with a clear tax invoice
- A deposit or trade-in in the deal
Gets tricky
- Mostly private use with thin records
- Recent arrears or defaults on the credit file
- A new ABN with little trading behind it
- A rare or modified car that is hard to value
Who holds the car matters too. If a company owns it and you use it privately, read FBT on a company car before you commit. For the finance side of that choice, see sole trader or company on vehicle finance.
A high value car is financed with the same products as any other business car. Lenders test the business and the car, while the car limit, luxury car tax and the GST credit cap decide how the numbers land.
Key takeaway: Run the car limit and luxury car tax on the exact car before you sign, then confirm the result with your accountant.Frequently Asked Questions
There is no published minimum credit score to buy a luxury car, because each lender sets its own credit policy. Lenders read the whole file, including any defaults, arrears and enquiries, rather than a single number. If your file has marks on it, read what to check on an ABN car loan with bad credit first.
A car attracts luxury car tax when its LCT value is above the threshold that applies. For 2026-27 that is $80,809, or $91,661 for a fuel-efficient car, according to the ATO, published 9 June 2026 and read 4 November 2026. The tax falls only on the amount over the threshold. Our vehicle finance page covers the wider range of business cars.
Luxury car finance in Australia works the same way as other business car finance, with a lender funding the car through a chattel mortgage, lease or hire purchase. The differences are the car limit, luxury car tax and the GST credit cap, which come into play at higher prices. Our chattel mortgage guide covers the basics of the most common structure for a car a business will own.
High value car loans are loans on cars at the upper end of the market, assessed on the same tests as smaller car loans with more weight on repayment capacity and resale value. Loan size and vehicle age limits vary by lender. If the car is going through a business, our ABN car loan guide covers what you need before you start.
Luxury car tax can be included in a car loan where the lender funds the price shown on the tax invoice, but how much of that price a lender will fund varies by lender. No credit is available for luxury car tax, even if the car is used for business. A broker can confirm the position for the exact car before you sign.
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