Prestige and luxury car finance for business use

When does a prestige car make sense for a business?

There are good business reasons for a higher-end car: client-facing roles where presentation matters, long highway kilometres where comfort and safety count, or hire-car and chauffeur businesses where the car is the product. There are also less convincing ones. Lenders and the ATO both care about the difference.

If the car genuinely serves the business, financing it through the business can be appropriate. Just go in knowing the tax benefits are capped.

The three tax limits on expensive cars

Rule	What it does	2026–27 figure
Car limit	Caps the cost used for depreciation	$69,883
GST credit cap	Caps the GST credit on purchase at one-eleventh of the car limit	$6,353
Luxury car tax threshold	LCT applies above this LCT value	$80,809 (other) / $91,661 (fuel-efficient)

For 2025–26 the figures were a car limit of $69,674 (maximum GST credit $6,334) and LCT thresholds of $80,567 and $91,387. All figures are from the ATO.

How does luxury car tax work?

Luxury car tax is charged at 33% on the amount by which a car’s LCT value exceeds the threshold. The ATO’s formula for a sale is:

(LCT value − LCT threshold) × 10 ÷ 11 × 33%

The dealer calculates and pays LCT through its BAS and passes it on in the price, so it’s built into what you pay. Because it’s part of the purchase price, it’s usually part of what you finance. The ATO notes the definition of a fuel-efficient vehicle changed from 1 July 2025, so confirm which threshold applies to your car. See luxury car tax for more.

Buying versus leasing a prestige car

	Chattel mortgage	Finance lease
Ownership	Business owns it	Financier owns it
GST credit	Capped at one-eleventh of the car limit	ATO says lease GST credits aren’t limited by the car limit
Income tax	Depreciation capped at the car limit	Special rules for leased luxury cars apply
End of term	Nothing owing (unless a balloon)	Residual to pay, refinance or hand back

The lease row often prompts businesses to ask whether leasing is a way around the car limit. The ATO’s income tax rules treat leased luxury cars in their own way, so the answer isn’t simple. Get your accountant’s view before choosing on tax grounds.

Fringe benefits tax

If a company or trust provides the car to an employee or director who uses it privately, FBT may apply — at 47% on the taxable value for FBT years up to 31 March 2027, according to the ATO. Expensive cars tend to have higher taxable values. Sole traders and partners don’t pay FBT on their own use, but can only claim the business share of costs. See FBT on business vehicles.

How lenders assess prestige cars

Lenders look at:

• affordability — the business’s income needs to comfortably support the repayments;
• purpose — how the car serves the business;
• resale value — some prestige models hold value well, others drop sharply;
• deposit or trade-in — often expected on higher-value cars;
• the borrower’s credit and history — reviewed once you decide to apply.

A sensible balloon on a model with strong resale can work; an aggressive balloon on a fast-depreciating model is risky.

Illustrative example: a chauffeur business

Illustrative only. A chauffeur company adds a luxury sedan for corporate transfers. The car’s price is above the LCT threshold, so LCT is in the dealer’s price. The company finances it through a chattel mortgage, claims the GST credit up to the cap, and its accountant confirms how depreciation applies under the car limit. Because the car is used almost entirely for paid trips, business use is high and well documented.

Prestige or practical?

If you need a dependable car for business, a mainstream model under the car limit often delivers the same business value with fewer tax limits — see business car finance. If the prestige car genuinely earns its place, we can help with that too.

Questions lenders may ask about a prestige car

• How does the car support the business — client meetings, paid trips, long-distance travel?
• What share of its use will be business?
• What’s the deposit or trade-in?
• How does the repayment compare with the business’s monthly income?
• Is there an existing vehicle being replaced?

Clear, honest answers help. Lenders are comfortable financing prestige cars for businesses that can afford them and genuinely use them.

Deposits and trade-ins on higher-value cars

Lenders often expect a deposit or trade-in on prestige cars, partly because these models can lose value quickly in the first few years. A meaningful deposit lowers the amount financed and reduces the risk of owing more than the car is worth — useful protection for your business as well as the lender.

Keeping records for a prestige car

Keep the tax invoice showing the LCT component, your finance documents and a logbook. With several tax limits in play, clear records make your accountant’s job easier and help you show the car’s genuine business use if anyone asks.

Talk to us about a higher-value car

Start a 60-second enquiry and tell us about the car and how your business will use it.

Enquiring doesn’t involve a credit check. Your details aren’t scattered across lenders; one specialist handles them and phones you. Please be open about the price, the business use and any private use — that’s what lets us find a lender comfortable with the car and give you an honest view of the tax limits. Check your options.