Australia–EU Trade Deal Scraps 5% EU Car Tariff and Lifts EV Luxury Tax Threshold to $120,000

Overview

• Australia and the European Union signed a free trade agreement that removes the 5% import tariff on EU‑built passenger cars.
• The government created a new, EV‑only Luxury Car Tax threshold at $120,000, keeping the tax in place for other vehicle categories.
• Any showroom price cuts will depend on whether carmakers pass on lower import costs, and EU parts going duty‑free could also trim servicing bills.
• Reporting estimates the higher EV threshold will reduce the number of taxed EVs from 97 to 61 and cut LCT on higher‑priced models by up to about $8,584.
• Key details remain unsettled, including when the LCT change begins and the status of the EV fringe‑benefits tax break, while the FCAI welcomed tariff removal and the AADA pushed for broader LCT reform.