ATO Interpretative Decision

ATO ID 2005/331

Goods and Services Tax

GST and supply of a car by way of lease to an individual who subsequently becomes an eligible disabled veteran
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Does a taxable supply of a car by way of lease by the entity, a finance company, to an individual change to a GST-free supply under section 38-505 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when, during the lease period, the individual's status as an eligible disabled veteran begins?

Decision

No, the supply of the car by way of lease by the entity to an individual does not change from a taxable supply under section 9-5 of the GST Act to a GST-free supply under section 38-505 of the GST Act when during the lease period the individual's status as an eligible disabled veteran begins.

The entity's supply remains a taxable supply under section 9-5 of the GST Act.

Facts

The entity is a finance company that is registered for goods and services tax (GST). The entity supplied a car to an individual under a lease agreement. This supply was a taxable supply under section 9-5 of the GST Act. During the term of the lease the individual's status as an eligible disabled veteran begins (see paragraphs 38-505(1)(a) and (b) of the GST Act).

Reasons for Decision

Under section 38-505 of the GST Act the supply of a car is GST-free if it is supplied to an individual who, having satisfied the requirements in subsection 38-505(1) of the GST Act, is an eligible disabled veteran. The requirements in subsection 38-505(1) of the GST Act must be satisfied when the supply is made to the individual for the supply to be GST-free.

After the entity supplies the car to the individual by entering the lease agreement the individual's status as an eligible disabled veteran begins. The individual was not an eligible disabled veteran when the supply is made. Because the relevant requirements of subsection 38-505(1) of the GST Act are not satisfied at the time that the supply of the car is made, the supply is not a GST-free supply to a disabled veteran under subsection 38-305(1).

Therefore, the entity's supply of the car lease remains a taxable supply under section 9-5 of the GST Act.

Note. Section 156-22 of the GST Act treats a supply by way of lease as a supply that is made on a progressive or periodic basis for the purposes of Division 156 of the GST Act in attributing any GST payable on a taxable supply. The attribution does not change the status of the supply.

Date of decision: 6 June 2002

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   section 38-505
   subsection 38-505(1)
   Division 156
   section 156-22

Other References:
Cars and the GST - purchases by eligible people with disabilities - fact sheet

Keywords
Goods and services tax
GST free
Cars for disabled veterans
Cars for other disabled people
GST supplies & acquisitions
Taxable supply

Business Line: GST

Date of publication: 25 November 2005

ISSN: 1445-2782

history

	Date:	Version:
You are here →	6 June 2002	Original statement
	9 December 2005	Archived

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