Explanatory Memorandum
(Circulated by the authority of the Treasurer, the Hon. J.S. Dawkins, M.P.)D. Explanation of the amendments
8. The Bill will reduce, from 20% to 15%, the rate of tax applicable to certain passenger motor vehicles. Vehicles that will qualify for the 15% rate of tax will be passenger motor vehicles of the kind referred to in heading 8703 in Schedule 3 to the Customs Tariff Act 1987 . The reduction in the rate will apply to both Australian-manufactured and imported vehicles.
Definition of 'passenger motor vehicles'
9. 'Passenger motor vehicles' for the purposes of heading 8703 are defined to be motor cars and other motor vehicles (including station wagons and racing cars) designed for the carriage of 2 or more persons. These vehicles will include sedans, coupes, taxi-cabs, station wagons, four-wheel drive cars that are not off-road vehicles, tourers and similar passenger vehicles that:
- (a)
- if imported, are classified under heading 8703; or
- (b)
- if manufactured in Australia, would be classified under that heading if they had been imported into Australia.
[Clause 6]
10. Vehicles that are specifically excluded from the definition of passenger motor vehicles are ambulances, hearses, police vans, amphibious vehicles and off-road vehicles.
[Clause 6]
11. Only passenger motor vehicles that have a wholesale sale value of $30,505 or less will be eligible for the reduced tax rate of 15%. The only exception to this rule will be vehicles that are specifically modified to transport disabled persons while seated in wheelchairs.
Motor Vehicles not covered by heading 8703
12. Motor vehicles that are not passenger motor vehicles for the purposes of heading 8703 under the Customs Tariff Act will continue to be taxed at the 20% rate. Vehicles taxed at the 20% rate will include panel vans, delivery vans, utilities, dual cabs, jeeps, trucks, off-road four-wheel drive vehicles, lorries and motor buses.
13. The only exception to the 20% tax rate will be off-road four-wheel drive vehicles that are motor cars or station wagons and which have a wholesale sale value above $30,505. These vehicles will be taxed at 30%.
14. Item 1 in the Fourth Schedule covers motor vehicles 'of a kind ordinarily used for commercial purposes'. The item will be amended so that it now applies to all motor vehicles not taxable at the 15% or 30% rates (with the exception of certain vehicles specifically excluded from the item). It will apply to vehicles whether or not they are of a kind used for commercial purposes.
[Clause 5]
The definition of 'sales tax rate'
15. Item 61 in the Second Schedule to the (E & C) Act contains the formula used to calculate the wholesale sale value threshold above which vehicles are taxed at 30%. One of the components of the formula is the 'sales tax rate' , which is specified to be the rate of tax applicable to goods covered by the Fifth Schedule (currently 20%). The reduction in the Fifth Schedule rate to 15% would have the effect of increasing the wholesale threshold amount. In order to avoid this, the formula will be amended to retain the sales tax rate at 20% (i.e. 0.2).
[Clause 4]
Amendments to the rate of tax
16. Sales Tax is imposed by the Sales Tax Acts (Nos. 1-9) 1930 . The Bill will amend these Acts to impose a tax rate of 15% on motor vehicles covered by the Fifth Schedule.
[Schedule to the Bill]