‑1 What this Division is about
A luxury car is one whose market value exceeds the car limit set for a car’s capital allowance deductions by section 40‑230. If the lessor of a luxury car is tax exempt, or taxed at a lower rate than the lessee, the lease could be structured to give both parties a better after‑tax outcome than if the lessee had bought the car. The lessee could fully deduct the lease payments, thereby avoiding the capital allowance limit for luxury cars, and the lessor would receive higher lease payments. This Division removes the tax benefit for the lessee by putting both parties in the same position as if the lessor had sold the car to the lessee and lent the lessee the purchase price.
Sourced from the Federal Register of Legislation at 25 May 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au. Verify the current text against the official source before relying on it.
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