ATO Interpretative Decision

ATO ID 2004/185 (Withdrawn)

Goods and Services Tax

• This ATO ID is withdrawn as it is superseded by NAT 3394 - Guide to Luxury Car Tax.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the entity, a motor vehicle restorer, 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 that it imported more than two years before the time of the supply and has been restored to its original condition?

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 that it imported more than two years before the time of the supply and has been restored to its original condition.

Facts

The entity is a motor vehicle restorer. The entity imported a car two years before the supply. The car was entered for home consumption at the time of importation.

The entity has subsequently restored the car.

The restoration process has restored the car to an 'as new' condition. The process has not resulted in the creation of a new car that is commercially distinct from the car that was imported.

The entity is now selling the car, that meets the meaning of a luxury car under subsection 25-1(1) of the LCT Act, in the course of carrying on its enterprise. The supply of the luxury car is connected with Australia.

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

Reasons for Decision

Subsection 5-10(1) of the LCT Act provides that an entity makes a taxable supply of a luxury car if:

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it supplies a luxury car

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the supply is made in the course of an enterprise that the entity carries on

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the supply is connected with Australia, and

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the entity is registered or required to be registered for GST.

The entity is supplying a luxury car in the course of its enterprise. The supply is connected with Australia and the entity is registered for GST. As such, the entity's supply of the luxury car meets the requirements of subsection 5-10(1) of the LCT Act.

However, paragraph 5-10(2)(b) of the LCT Act provides that an entity does not make a taxable supply of a luxury car if the luxury car is more than two years old.

Under subsection 5-10(3) of the LCT Act a car is more than two years old at the time of a supply if:

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for a car that has not been imported - the car was manufactured more than two years before the time of the supply, or

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the car was entered for home consumption more than two years before the time of the supply.

The entity imported a car, which was entered for home consumption more than two years before the entity's present sale of the luxury car.

The restoration process has not resulted in the creation of a new car because the end product is a car restored to an 'as new' condition that is not commercially distinct from the original car imported.

It has been more than two years since the car was entered for home consumption and therefore, the entity is supplying a car that is more than two years old.

Accordingly, the entity is not making a taxable supply of a luxury car under section 5-10 of the LCT Act when it sells a car, that has been restored to its original condition, which it imported more than two years before the time of the supply

Note: If an entity is selling a car that was imported, the car will be more than two years old if it was imported more than two years before the time of the supply.

Legislative References:
A New Tax System (Luxury Car Tax) Act 1999
   section 5-10
   subsection 5-10(1)
   paragraph 5-10(2)(b)
   subsection 5-10(3)
   subsection 25-1(1)

Keywords
Goods and services tax
GST Luxury Car Tax Stream
Luxury vehicles

Business Line:  GST

Date of publication:  27 February 2004

ISSN: 1445-2782