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The tax that outlived its reason: BMW and Polestar unite in the case against LCT

Inside Line

The FBT taper has drawn a new line at $75,000 and in doing so, put a brighter spotlight on the tax that sits above it. BMW Group Australia and Polestar Australia both told TheAutoExec the Luxury Car Tax has no defensible policy purpose left, and the new cap makes that problem harder to ignore.

Mike Sinclair
13 May 2026 · 4 min read

Phase two of the electric vehicle incentive fringe benefits tax (FBT) changes from April 2027 creates a narrow bracket between $75,000 and the Luxury Car Tax (LCT) threshold for fuel-efficient vehicles ($91,387 for FY 2026–27). EVs inside that bracket lose the full FBT exemption and drop to a 25 percent FBT discount. EVs priced above the LCT threshold continue to attract no FBT concession, as they do today.

For mass-market brands operating below $75,000, the new cap is irrelevant. For premium importers, much of the volume sits inside the bracket or above it.

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BMW Mercedes-Benz Polestar
Mike Sinclair
Mike Sinclair
Partner and Principal Columnist, TheAutoExec Network

Mike Sinclair is an equity partner and Principal Columnist for TheAutoExec Network. Mike has been testing and writing about cars, motorcycles and more for over 30 years. He was a key executive team member when ACP Media and Carsales formed Australia's leading automotive, industrial, marine and motorcycle online network in the 2000s, and the driving force behind the launch of motoring.com.au. For two decades, Mike led the large multimedia and editorial team at Carsales, and all PR and corporate communications. With significant exposure to both OEM and dealership disciplines, Mike now consults with a number of key brands on a range of automotive and powersports opportunities.

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