What Is Car Stamp Duty?
Stamp duty is a tax imposed on the licensing of cars or transfer of vehicle ownership as per the Duties Act 2008. In WA, this tax is collected by the Department of Transport and is a crucial part of the car buying process. The amount of stamp duty you pay is based on the vehicle’s purchase price. In the case of used vehicles, it’s calculated based on the market value or the purchase price, whichever is higher.
How Is Stamp Duty Calculated In WA?
In Western Australia, stamp duty is calculated using a tiered system based on the vehicle’s value. You can also use the DOT car stamp duty calculator here. Here’s a breakdown of how it is calculated:
Car market value is up to $25,000: 2.75% of market value
Car market value is $25,000 – $50,000: R% of the market value, where R = [2.75 + ((marketvalue – 25,000)/ 6,666.66)] rounded to 2 decimal places
Car market value is over $50,000: 6.5% of market value
Example For Car Valued At $20,000
For a car valued at $20,000:
- The duty rate for values up to $25,000 is 2.75%.
- Duty = $20,000 * 2.75% = $550.
Example For Car Valued At $35,000
For a car valued at $35,000:
- The duty rate (R) for values between $25,000 and $50,000 is calculated using the formula:
- R = [2.75 + ((market value – 25,000) / 6,666.66)] rounded to 2 decimal places.
- Calculate R: R = [2.75 + ((35,000 – 25,000) / 6,666.66)] = [2.75 + (10,000 / 6,666.66)] ≈ [2.75 + 1.50] = 4.25%.
- Duty = $35,000 * 4.25% = $1,487.50.
Example For Car Valued at $60,000
For a car valued at $60,000:
- The duty rate for values over $50,000 is 6.5%.
- Duty = $60,000 * 6.5% = $3,900.
How Is Stamp Duty Calculated for Second-Hand Vehicles?
For second-hand vehicles, the calculation of stamp duty in WA is based on the market value or the purchase price of the vehicle, whichever is higher.
Why Is Calculating Stamp Duty Important?
Understanding stamp duty is crucial because it impacts the total cost of purchasing a vehicle. Being aware of this tax helps you:
- Budget Accurately: Knowing the stamp duty allows you to factor it into your overall car budget, especially when buying privately.
- Be Prepared: By understanding stamp duty, you can factor it into the price when negotiating at the car dealership.
- Comply with Legal Requirements: Paying the correct stamp duty ensures you comply with WA’s legal requirements, avoiding potential fines or legal issues.
When Is Stamp Duty Paid?
Stamp duty must be paid at the time of transferring the vehicle’s registration. Typically, this is handled by the dealership if you’re buying a new or used car from a commercial seller. For private sales, the buyer is responsible for ensuring the stamp duty is paid when lodging the transfer papers with the Department of Transport.
How to Pay Stamp Duty
Dealership Purchases: If buying from a dealership, the stamp duty is usually included in the on-road costs, and the dealer will handle the payment.
Private Sales: For private sales, the buyer must pay the stamp duty directly to the Department of Transport. This can be done online through the DOTDirect portal or at a Driver and Vehicle Services Centre.
Exemptions On Stamp Duty And How To Apply
Certain circumstances might qualify you for stamp duty exemptions or concessions. We’ve listed them based on their application method:
Apply to RevenueWA if:
- you are transferring the licence between spouses or de facto partners
- the vehicle is returned to the seller for a full refund of the purchase price or a replacement vehicle
- an agreement to purchase a vehicle is cancelled before you take possession
- the transfers regarding a caravan licence
Apply to the Department of Transport if:
- you are transferring the licence between spouses or de facto partners
- you are seeking a charitable concession of the vehicle licence fee
- you are applying for the grant of a licence already registered to you in another state
- you have already paid duty on the vehicle and there is no change in ownership