ATO Interpretative Decision

ATO ID 2003/436 (Withdrawn)

Goods and Services Tax

LCT and the supply of a luxury car to a car dealer who quotes their ABN
FOI status: may be released
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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, an importer of luxury cars, making a taxable supply of a luxury car under section 5-10 of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act), when it sells a luxury car to a car dealer who quotes their Australian business number (ABN) in the approved form?

Decision

No, the entity is not making a taxable supply of a luxury car under section 5-10 of the LCT Act, when it sells a luxury car to a car dealer who quotes their ABN in the approved form.

Facts

The entity is an importer of luxury cars.

The entity imports a luxury car. The car is a luxury car for the purposes of the LCT Act. The entity sells the car to a car dealer who quotes its ABN in the approved form for the purposes of the LCT Act. At the time of quoting its ABN, the car dealer intends to hold the car as trading stock.

The entity is registered for goods and services tax (GST).

Reasons for Decision

Under subsection 5-10(1) of the LCT Act, an entity makes a taxable supply of a luxury car if:

•
they supply a luxury car; and
•
the supply is made in the course or furtherance of an enterprise that they carry on; and
•
the supply is connected with Australia; and
•
they are registered, or required to be registered for GST.

However, under paragraph 5-10(2)(a) of the LCT Act, an entity does not make a taxable supply of a luxury car if the recipient quotes for the supply of the car.

Section 27-1 of the LCT Act defines that the term 'recipient', in relation to a supply, means the entity to which the supply was made. As the entity sells the car to a car dealer, the recipient of the supply is the car dealer.

'Quote' is defined in section 27-1 of the LCT Act as meaning to quote an ABN.

Section 9-5 of the LCT Act further provides that a recipient is entitled to quote its ABN in relation to the supply of a luxury car only in certain circumstances. A recipient is entitled to quote their ABN if, at the time of quoting, they had the intention of using the car for one of the following purposes:

•
holding the car as trading stock, other than holding it for hire or lease; or
•
research and development for the manufacturer of the car; or
•
exporting the car in circumstances where the export where the export is GST-free under Subdivision 38-E of the A New Tax System (Goods and Services Tax) Act 1999.

At the time of purchase the recipient, the car dealer, intends to hold the car as trading stock and quotes its ABN in the approved form.

Therefore, the entity is not making a taxable supply of a luxury car under section 5-10 of the LCT Act, when it sells a luxury car to a car dealer who has quoted their ABN in the approved form.

Date of decision:  25 November 2002

Legislative References:
A New Tax System (Luxury Car Tax) Act 1999
   section 5-10
   subsection 5-10(1)
   paragraph 5-10(2)(a)
   section 9-5
   section 27-1

A New Tax System (Goods and Services Tax) Act 1999
   Subdivision 38-E

Other References:
Fact sheet - Luxury Car Tax - Nat 2963
Guide to Luxury Car Tax - Nat 3394

Keywords
GST Luxury Car Tax Stream
Luxury vehicles

Business Line:  GST

Date of publication:  6 June 2003

ISSN: 1445-2782

history
  Date: Version:
  25 November 2002 Original statement
You are here 30 September 2005 Archived

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