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ATO Interpretative Decision

ATO ID 2001/496 (Withdrawn)

Goods and Services Tax

GST and the supply of a car to a person with a disability
FOI status: may be released
CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is the entity, a motor vehicle dealer, making a GST-free supply under section 38-510 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies a car to a person with a disability, who satisfies subsection 38-510(1) of the GST Act?

Decision

Yes, the entity is making a GST-free supply under section 38-510 of the GST Act when it supplies a car to a person with a disability, who satisfies subsection 38-510(1) of the GST Act.

Facts

The entity is a motor vehicle dealer. The entity is registered for goods and services tax (GST). The entity supplies a car to a person with a disability ('the individual'). The car is a 5 seater motor vehicle. The GST inclusive market value of the car does not exceed the car limit.

The individual has a current disability certificate issued by the Managing Director of the nominated company (within the meaning of Part 2 of the Hearing Services and AGHS Reform Act 1997), certifying that the person has lost the use of one or more limbs and is unable to use public transport. The individual intends to use the car for their personal transportation to and from gainful employment for at least two years.

Reasons for Decision

Under subsection 38-510(1) of the GST Act, a supply of a car to an individual is GST-free where the individual:

•
has a current disability certificate issued by:

•
the person holding the position of Managing Director of the nominated company (within the meaning of Part 2 of the Hearing Services and AGHS Reform Act 1997); or
•
an officer or employee of that company who is authorised in writing by the Managing Director for the purposes of this section;

•
certifying that the individual has lost the use of one or more limbs to such an extent that he or she is unable to use public transport; and
•
intends to use the car in his or her personal transportation to or from gainful employment during all of the Subdivision 38-P period.

In this case, the individual has a current disability certificate, issued by the relevant authority, certifying that they have lost the use of one or more limbs to such an extent that they are unable to use public transport. The individual intends to use the car for their personal transportation to and from gainful employment.

The Subdivision 38-P period is defined in section 195-1 of the GST Act. It is the period starting when the person with the disability acquires the car and ending at the earliest of the following times:

•
the end of 2 years after the acquisition; or
•
the time when the car is no longer reasonably capable of being used for the purpose for which cars of that kind are ordinarily used; or
•
a time that the Commissioner considers to be appropriate in special circumstances.

As the individual intends to use the car for their personal transportation to and from gainful employment for a period of at least two years, the requirements of subsection 38-510(1) of the GST Act are satisfied.

As the GST-inclusive market value of the car does not exceed the car limit subsection 38-510(2) of the GST Act is not applicable.

Therefore, the entity is making a GST-free supply under section 38-510 of the GST Act when it supplies the car to a person with a disability.

[NOTE: It does not matter if the individual purchasing the car subsequently sells the car prior to the end of the Subdivision 38-P period. It is the intention of the purchaser at the time of the supply that determines the GST status of the supply.]

Date of decision:  4 September 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 38-510
   subsection 38-510(1)
   subsection 38-510(2)
   section 195-1

Hearing Services and AGHS Reform Act 1997
   Part 2

Other References:
Fact sheet - Cars and the GST - purchases by eligible people with disabilities - Nat 4325

Keywords
Goods & services tax
GST-free
Cars for other disabled people

Business Line:  GST

Date of publication:  22 October 2001

ISSN: 1445-2782

history
  Date: Version:
  4 September 2001 Original statement
You are here 25 November 2005 Archived

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