DREAMTECH INTERNATIONAL PTY LTD v FC of T

Members:
E Fice M

Tribunal:
Administrative Appeals Tribunal, Melbourne

MEDIA NEUTRAL CITATION: [2009] AATA 365

Decision date: 19 May 2009

---

E Fice (Member)

1. Dreamtech International Pty Ltd (Dreamtech) is a licensed motor vehicle dealer. It imports a range of motor vehicles. It also makes extensive modifications to those vehicles, which frequently involves lengthening (or stretching) vehicles and installing more luxurious interiors. On some occasions the vehicles are provided by customers seeking to have them modified, while on other occasions, Dreamtech purchases the vehicles and modifies them according to customer orders. Dreamtech does not lease or hire vehicles to customers.

2. On or about 13 June 2007 Dreamtech imported a motor vehicle from Krystal Enterprises Inc in the United States of America (USA). The vehicle was described as a Krystal Hummer (the Hummer), Model: H1 limousine. It is a massive vehicle which has already been stretched from its original 122.8 inch wheelbase to a 140 inch wheelbase. It weighs 5.82 tonnes. The price of the Hummer was $156,222.81. This exceeded the luxury car tax (LCT) threshold which was set at $57,009 in the tax year ending June 2007.

3. LCT on importations is paid along with Customs Duty to the Australian Customs Service (s 2-10 A New Tax System (Luxury Car Tax) Act 1999) (LCT Act). On 14 August 2007 the Australian Customs Service assessed Dreamtech to be liable to pay LCT of $22,548.59 for the Hummer. That assessment was made in accordance with s 22(2) of the Taxation Administration Act 1953.

4. On 16 August 2007 Dreamtech lodged an objection with the Australian Customs Service against the imposition of LCT. Dreamtech submitted that the imported Hummer was not a vehicle to which the LCT Act applied. That objection was forwarded to the Commissioner of Taxation (the Commissioner) on 10 September 2007. On 5 February 2008 the Commissioner issued a Notice of Decision on Objection, stating that Dreamtech's objection to the imposition of LCT on the Hummer vehicle had been disallowed. Dreamtech now seeks a review of that decision.

5. The description luxury car is defined in the LCT Act simply as a car whose luxury car tax value exceeds the LCT threshold. The word car is defined, amongst other things, to include a limousine. However, the word limousine is not defined in the LCT Act. The only issue which I am required to determine is whether the Hummer should be regarded as a limousine for the purposes of the LCT Act.

Description of the vehicle

6. Having had the benefit of a view, it is no exaggeration to say that the Hummer is a most extraordinary motor vehicle. The vehicle viewed was a Hummer stretched to 200 inches or some 16.6 feet. This is slightly larger than the vehicle which is the subject of this application. That vehicle is stretched to 140 inches and has a carrying capacity of 14 persons including the driver. It is about 5 feet shorter than the vehicle examined. It weighs 5.82 tonnes and otherwise, the vehicle in question is almost identical to the vehicle examined on the view.

7. According to Mr James Ware, a Director of Dreamtech, the Hummer is a brand of off-road vehicle based on the United States' military's high mobility multi-purpose wheeled vehicle known as the Humvee. The Hummer is a civilian derivative of the Humvee.

8. The Hummer chassis is based on the type used by General Motors in many of its pick-up truck type vehicles. It is equipped with a heavy-duty suspension designed for high load

---

ATC 2940

capacity, despite the ride quality being compromised. The body of the Hummer is bolted on to the top of the chassis, unlike most motor cars, where the body is integral with the chassis. The Hummer, as modified by Dreamtech, is fitted with truck tyres, each capable of carrying a load of 2.7 tonnes.

9. Dreamtech modifies the Hummers it imports so they can be used on Australian roads. The vehicle is converted to a right-hand drive. The rear wheels are modified so that when turning a corner, they turn in the opposite direction to that of the vehicle, thus reducing the turning circle to some 24.7 metres. Although the vehicle comes with the roof emergency exit, because that does not meet Australian design regulations, it is decommissioned. The right rear door of the vehicle serves as the emergency exit. Dreamtech also modifies seating height and seating positions within the vehicle. The vehicle has a low profile, unlike a conventional bus, and it is not possible to stand upright once inside it. In fact, even in the seated position, headroom is limited. All the lights on the vehicle are modified to comply with Australian design rules. In addition, because of the vehicle's size, side marker lamps are fitted as well as end outline marker lamps on all four corners of the roof. Some vehicles are fitted with retractable electric steps and some with mechanically-activated retractable steps. There are two doors at the rear of the vehicle, one being used only for emergency purposes and the other, on the curb-side of the vehicle, for normal loading and unloading of passengers. According to Mr Ware, the seats in the stretched Hummer are raised because the Hummer is classified as a bus under the Australian design rules. This causes occupants' knees to be higher than hip level when seated, which is less comfortable than vehicles which have not been modified to comply with Australian design rules. The seats down each side of the vehicle are offset; otherwise there would be insufficient leg room for passengers sitting opposite each other.

10. The interior of the vehicle has a luxurious appearance despite the fact that seat coverings are vinyl rather than leather. It is equipped with flashing lights and strobe lights under the seats. It has provision for large ice buckets for holding bottles of wine or beer and it is equipped with three liquid crystal display screens and a DVD player. It has a built-in sound system which can be played at a very high volume. The ceiling is made of polished stainless steel which acts as a mirror. It also contains small multicoloured fibre optic lights. Mr Ware described the modified Hummer as a mobile nightclub or a party vehicle. In my opinion, that is an appropriate description.

11. The side windows in the vehicle cannot be opened except for those on the doors. The driver is separated from the passengers by a partition. The front cabin can carry one passenger in addition to the driver. The two cabins are connected by an intercom system.

12. Because of its large turning circle and size, the Hummer is often unable to make a 90° turn in a narrow street. It is not suitable for use on many suburban streets.

The Hummer - an omnibus or limousine?

13. Dreamtech's contention is that the Hummer cannot properly be described as a car within the meaning of the LCT Act and therefore cannot be a limousine. According to Dreamtech, it should properly be classified as a bus.

14. Liability for luxury car tax under the LCT Act arises where there is a taxable importation of a luxury car. Insofar as it is relevant, s 7-10 of the LCT Act provides:

" 7-10 Taxable importations of luxury cars

• (1) You make a taxable importation of a luxury car if:
  • (a) the *luxury car is *imported; and
  • (b) you *enter the car for home consumption.
  • …"

15. Section 25-1 of the LCT Act defines a luxury car as a car whose luxury car tax value exceeds the LCT threshold. There was no issue about the fact that the value of the Hummer exceeded the LCT threshold. The word car is a defined term in the Act. It is defined in s 27-1 in the following way:

---

ATC 2941

" car means a *motor vehicle (except a motor cycle or similar vehicle) that is:

• (a) designed to carry a load of less than 2 tonnes and fewer than 9 passengers; or
• (b) a limousine (regardless of the number of passengers it is designed to carry)."

16. The expression motor vehicle is also defined and it means a motor powered road vehicle (including a 4-wheel drive vehicle) There was no issue about the fact that the Hummer is motor powered; although it was disputed that it could properly be described as a road vehicle for the purposes of the LCT Act. Because the Hummer is designed to carry more than nine passengers, it clearly does not fall within the first limb of the definition of car. Therefore, the Hummer can only be a car if it is properly described as a limousine. The Hummer does not fall within any of the exclusions in the definition of luxury car set out in s 25-1(2) of the LCT Act. It follows that Dreamtech's liability for LCT is dependent entirely upon it being established that the Hummer is a road vehicle which can properly be described as a limousine for the purposes of the LCT Act.

17. It is of some benefit to examine the history of the LCT Act in order to understand what the legislature had in mind when it decided to introduce a luxury car tax. The Explanatory Memorandum to A New Tax System (Luxury Car Tax) Bill 1999 (the Bill) explained that a LCT would be introduced from 1 July 2000 on taxable supplies and importations of luxury cars. It replaced the existing 45 per cent wholesale sales tax that applied to luxury cars and it was designed to ensure that, following the introduction of the Goods and Services Tax (GST), the value of luxury cars would fall in price by about the same amount as a car just below the LCT threshold, which at that time was $55,134. This was because the price of cars in general was expected to fall on the introduction of the GST. As the Explanatory Memorandum states: If the Government took no specific action then the price of luxury cars would fall dramatically.

18. It is significant that as originally framed, the Bill referred only to a motor vehicle designed to carry a load of less than 2 tonnes and fewer than 9 passengers. There was no reference to limousines. The definition of motor vehicle in the Bill was precisely the same as it is in the current Act. The explanatory memorandum to the Bill stated:

"The term << car >> is defined in the Dictionary and means a motor vehicle (except a motor cycle or similar vehicle) designed to carry a load of less than 2 tonnes and fewer than 9 passengers. A motor vehicle is defined to mean a motor-powered road vehicle (including a 4-wheel drive vehicle). Therefore, the definition of << car >> includes all passenger cars including station wagons, all 4-wheel drives, light trucks, motor homes, campervans and hearses."

19. At the time the Bill passed into law, it was amended by the A New Tax System (Indirect Tax and Consequential Amendments) Act (No 2) 1999. That amendment added the description a limousine (regardless of the number of passengers it is designed to carry) to the definition of car in the LCT Act. The Revised Explanatory Memorandum circulated by the Treasurer explained that while the definition of car was expansive, some luxury passenger vehicles, such as stretched limousines, are designed to carry more than 9 passengers. Because of the limitations set out in the definition of car as originally proposed, stretched limousines designed to carry more than 9 passengers would not have been covered by the Act as originally drafted. The Memorandum states that this is contrary to the Government's original intention. For clarity, the definition of car in s 27-1 of the LCT Act was amended to include a limousine, regardless of the number of passengers it was designed to carry.

20. Mr Flynn, counsel for Dreamtech, submitted that the Revised Explanatory Memorandum was somewhat confusing because of the statement:

"The definition of << car >> is intended to include all passenger cars (including station wagons), all 4-wheel drive vehicles, light trucks, motor homes, campervans and hearses."

21. Mr Flynn submitted that the definition of car, after amendment, would not apply to vehicles such as light trucks and campervans if they have the capacity to carry 9 or more

---

ATC 2942

passengers or 2 tonnes or more. While it is true that if the above phrase in the Revised Explanatory Memorandum is read in isolation, one might arrive at the conclusion proposed by Mr Flynn. But that is not the correct way of reading it. As the High Court of Australia said in
Metropolitan Gas Co v Federated Gas Employees' Industrial Union (1924) 35 CLR 449 at 455 (per Isaacs and Rich JJ): …every passage in a document must be read, not as if it were entirely divorced from its context, but as part of the whole instrument. The paragraph preceding the paragraph mentioned by Mr Flynn, carries the qualification that the then current definition of car in the LCT Act applies to a motor vehicle designed to carry a load of less than 2 tonnes and fewer than 9 passengers. Quite clearly, the subsequent statement is intended to be read taking into account the load and passenger limits described. The only purpose of adding limousines to the definition of car was that stretched limousines are not infrequently designed to carry more than 9 passengers, and therefore they would not have been captured by the Act as originally drafted.

22. The consequence is that a limousine which falls within the definition of motor vehicle is caught by the LCT Act, regardless of the number of passengers it is designed to carry. I do not accept Mr Flynn's submission that the expression limousine distinguishes between passenger cars and 4-wheel drive vehicles. A limousine is included in the definition of car so long as it fits the description of motor vehicle. In other words, if a vehicle properly described as a limousine is a motor powered road vehicle, even if it is a 4-wheel drive vehicle, it fits the description of car as defined in the LCT Act. Therefore, it is conceivable that a vehicle properly described as a limousine, could also satisfy part (a) of the car definition if it was designed to carry fewer than 9 passengers. The reference to limousine was simply added to the definition of car because it was recognised that such motor vehicles are often designed to carry more than 9 passengers and, if the definition did not specifically make reference to such a vehicle, then, contrary to the Government's intention, the vehicle would not be subject to LCT.

23. The essence of the dispute between the parties is whether the Hummer can be described as a limousine for the purposes of the LCT Act. The expression limousine is not defined in the LCT Act. Therefore, according to the rules of statutory interpretation, it should be given its ordinary meaning, having regard to the context in which that word appears in the LCT Act. As the House of Lords said in
Seay v Eastwood [1976] 1 WLR 1117 at 1121: commonsense, experience of the world and local knowledge should guide the interpretation of such provisions.

24. The word limousine is defined in the Shorter Oxford English Dictionary as:

"A motor-car with a closed body and roofed place for the driver.

The Australian Concise Oxford Dictionary defines limousine as:

a large luxurious motor car, often with a partition behind the driver.

The Macquarie Dictionary definition is more expansive, defining limousine as:

• 1. any large, luxurious car, esp. a chauffeur driven one.
• 2. an airline bus carrying passengers between the city terminal and the airport."

25. Mr Flynn submitted that the ordinary meaning of the word limousine led inescapably to the conclusion that a vehicle so described must be a car within the ordinary meaning of that term, and it must be large and luxurious. However, that submission may not be entirely correct as is demonstrated by the Macquarie Dictionary definition of limousine. In any event, the word car is a defined term in the LCT Act and accordingly, it is irrelevant, for the purposes of that Act, what the ordinary meaning might be. With respect to Mr Flynn, it makes no sense to fix on the ordinary meaning of the word limousine, which refers to a large luxurious car, and then to say that one must therefore accept the ordinary meaning of the word car when attempting to determine whether the vehicle is a limousine. For the purposes of the LCT Act, a limousine must be a car as that term is defined in the Act. Therefore, for the purposes of the LCT Act, a car must be a motor vehicle (again a defined term) which may be a limousine or, conversely, a limousine must be a motor vehicle (as that term is defined in the Act). Therefore, for the purposes of the LCT

---

ATC 2943

Act, a limousine must be a motor powered road vehicle (which includes a 4-wheel drive vehicle). It cannot be disputed that the Hummer is motor powered. Whether it is also a 4-wheel drive vehicle matters not. The question therefore is whether it can be described as a road vehicle.

26. The expression road vehicle is not defined in the LCT Act. Mr Wheelahan of counsel, representing the Commissioner, drew my attention to
Deputy Commissioner of Taxation v ICI Australia Operations Pty Ltd 87 ATC 4069; (1987) 18 ATR 313, a decision of Murray J of the Supreme Court of Victoria. In that case, his Honour, when dealing with a sales tax dispute, was required to determine whether three modified vehicles, known as Mobile Manufacturing Units or MMUs, fell within the expression road vehicles of the kinds ordinarily used for the transport of persons or the transport or delivery of goods. The MMUs were essentially used to transport chemicals to mine sites and there to manufacture explosives. Although based on a cab chassis purchased from International Harvester Co Ltd, the vehicles were highly modified to suit the purpose for which they were intended. An additional two steering sets wheels were added by reason of load carrying capacity and the vehicle required heavier springs, a heavier suspension on the rear axles and heavier tyres. Murray J found that although the MMUs were able to and did in fact travel on public roads, the proportion of their time travelling on public roads was small compared with their time travelling on roads on mine premises, and the time they spent stationary at the mine site while manufacturing and delivering explosives. Nevertheless, his Honour held that the vehicles were properly described as road vehicles. He said, at 320:

"In the first place it appears to me that an MMU is a road vehicle. It is not to the point in my opinion that MMUs may seldom travel on public roads. A vehicle may be a road vehicle and yet be exclusively used on roads within private property. The manager of a large cattle station may purchase a utility for use exclusively for travel on the property whether over rough country or on bush tracks but nevertheless the utility is still a road vehicle."

And further, he said at 321:

"There are of course numerous vehicles which might be described as off-road vehicles which may be characterized as machines capable of movement under their own power but not designed for movement on roads. A good example would be a tractor with iron spiked rear wheels for use for agricultural purposes. Having given the matter a good deal of consideration I have come to the conclusion that an MMU must be characterized as a road vehicle. As I have said it is not to the point that the greater part of its use may be off roads. It is fundamentally a vehicle and a vehicle of a kind which is designed for use on roads be they public roads or private roads."

27. The evidence was that the Hummer is a brand of off-road vehicle based on the military Humvee. Mr Ware's evidence was that the vehicle is based on a standard General Motors' vehicle chassis used as the basis for many types of General Motors' pick-up trucks. While it has been designed with high off-road capabilities, there was no suggestion that the vehicle, in its unmodified form, was not also designed to be used on roads. In fact, even without modification, it clearly is a vehicle designed for use both on roads and for off-road driving. Despite this, Mr Flynn placed great emphasis on the fact that the Hummer was not able to be driven on Australian roads for legal and practical reasons. He said that the vehicle did not comply with Australian design regulations and therefore could not legally operate on Australian roads. He also said that for practical reasons, it would also be very difficult to drive on Australian roads. This was a reference to the vehicle's large turning circle which limits the types of roads on which it could operate. However, in my opinion, that is not an answer to whether the Hummer can be described as a motor powered road vehicle. The fact that it is equipped with left-hand drive when imported from the USA; that it fails to comply with Australian design regulations; and that it does not meet Australian standards for registration to enable it to be driven on roads in Australia is beside the point. In my opinion, the Hummer

---

ATC 2944

was designed as a civilian vehicle for on road and off-road use. The modifications carried out by Dreamtech do not alter the essential character of the vehicle, but rather make it lawful for the vehicle to be driven on Australian roads; and the steering modification to the rear wheels simply makes it easier for the stretched Hummers to be driven more readily in narrower streets. Accordingly, I find that the Hummer, when imported from the USA, satisfies the definition of motor vehicle for the purposes of the LCT Act. It is a motor powered road vehicle.

28. The only remaining question is whether the Hummer is properly described as a limousine, as that expression is understood in the ordinary sense. As I have set out above, the ordinary meaning of the word limousine is reasonably wide although, for the present purposes, we can probably disregard the second meaning attributed to that word in the Macquarie Dictionary. The Hummer is not a vehicle designed for carrying passengers between a city terminal and the airport. However, that definition does raise the interesting question about how the word limousine is ordinarily used. It seems to me that although the word limousine is reasonably well understood, it may mean different things to different people. Hence the bus carrying passengers between the city terminal and airport might be described, colloquially, as a limo. A more common description used these days is perhaps shuttle-bus. The Privy Counsel in
Falkiner v Whitton [1917] AC 106, when referring to the words chassis of motor cars, lorries and wagons said, at 110:

"It also appears clear from an examination of these enactments that those words [the words 'motor cars, wagons, and lorries'] are not treated as terms of art, and are not used in them in any technical sense or with any special meaning. They must therefore be interpreted according to their common and ordinary meaning, namely, that which they bear in ordinary colloquial speech. …"

29. It is appropriate, in my view, that when interpreting the meaning of limousine in its ordinary sense, we should refer to that expression as it is commonly used in colloquial speech. In my opinion, that incorporates the fact that a limousine is usually considerably larger than a standard road vehicle, conveying a sense of luxurious motor transport driven by a chauffeur.

30. There was no dispute about the fact that the stretched Hummer is a large vehicle. In fact, it is enormous. Its length considerably exceeds the length of a small bus. However, unlike a bus, its profile is low and it is not possible to walk around in the Hummer in an upright position.

31. Mr Flynn argued that the Hummer is not luxurious. He submitted that it would be reasonable to expect that a luxurious motor vehicle would have high quality suspension, good soundproofing to reduce noise from the engine and a good quality interior, such as leather seats and wood panelling or a finish of similar quality. While I readily accept Mr Flynn's description of a luxurious motor vehicle, I do not accept that persons under the age of 30 years would necessarily agree with that description. The Hummer is clearly designed to attract younger people for the purpose of having a good time. It has all the characteristics which young people would, in my opinion, find luxurious. That is, luxuriously-styled seating covered with black vinyl, ice buckets and glasses for drinking, a DVD player and screens, no doubt to play music videos at very loud sound levels. In addition, it has a reflective polished metal interior roof fitted with what can only be described as disco lights. It is not difficult to accept that these features are attractive to young people who would see them as luxurious despite the fact that some of us, who have reached a certain age, would not necessarily agree. For those young people to whom this vehicle would appeal, a good quality suspension, soundproofing and quality interior including wood panel finish would simply not be relevant. I seriously doubt that any passenger would notice engine noise with a sound system battering the eardrums at very high decibel outputs. The fact that it is rather cramped inside and the ride may be rather firm would, I believe, not even be noticed by the types of persons attracted to use the services of this kind of vehicle.

32.

---

ATC 2945

Given the market to which this vehicle is directed, it hardly comes as a surprise that in promotional material the vehicle is described as a chauffeur-driven limousine. One advertising brochure describes it this way:

"Whether it is your wedding day, corporate function, formal or any other special occasion you can travel through Sydney as if you are a Hollywood movie star with one to 14 of your friends, this over 8.5m long vehicle will make you feel like the toast of the town."

I have no doubt that were the Hummer described as a luxury bus, it would not have anywhere near the same appeal as describing it as a luxury limousine. Although the promotional material does not necessarily lead to the inescapable conclusion the Hummer must be a limousine, it is indicative of the common description given to this vehicle in ordinary colloquial speech.

33. Dreamtech also made the point that the Department of Transport and Regional Services classifies the Hummer as a heavy bus. It is required to comply with certain rules governing buses, including having a fire extinguisher, an emergency exit and a speed governor. The driver of the vehicle must hold a licence which entitles that person to drive a bus. The vehicle is registered as a heavy bus.

34. While I accept that the Hummer may be treated by the Department of Transport and Regional Services as a bus, I would expect that to be for the reason that it carries far more passengers than an ordinary passenger vehicle and that it is considerably larger and heavier. It therefore makes sense that, from a vehicle registration and design viewpoint, it should comply with the ordinary safety features expected to be found on a bus. I also accept that smaller limousines, that is vehicles that are ordinarily constructed as sedans although stretched, which carry less than 9 passengers, might well have quite different registration and operational requirements. Obviously, the difference is the number of people carried and the size and the weight of the vehicle. Those legal requirements do not, in my opinion, affect the Hummer's characterisation for the purposes of the LCT Act. I find that the Hummer is a motor powered road vehicle which fits the description limousine.

Conclusion

35. Because the Hummer satisfies the definition of car in the LCT Act and its value exceeds the LCT threshold, I find that the Hummer is a luxury car for the purposes of s 25-1 of the LCT Act. It does not fit within any of the descriptions set out in s 25-1(2) which apply to exempt certain types of motor vehicles. Therefore, according to s 7-5 of the LCT Act, Dreamtech is liable to pay LCT on the importation of the Hummer vehicle. Accordingly, I find that the decision made by the Commissioner on 5 February 2008 disallowing Dreamtech's objection to the imposition of the LCT was correct. That decision is affirmed.