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Edited version of private ruling
Authorisation Number: 1011491571500
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Ruling
Subject: Definition of a 'car'
Question 1
Will a modified commercial vehicle be a 'car' as defined by section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes
Relevant Facts
You propose to purchase a modified commercial vehicle so that you can transport a wheelchair bound family member with your family.
You hold a quote from a vehicle supplier that details the modifications you wish to make to a vehicle that complies with Australian design standards.
The modifications will result in a vehicle that will sit five adults with room for a wheelchair behind the front passenger seat. A wheelchair hoist will be installed at the rear of the vehicle.
The vehicle supplier will make further adjustments to the vehicle under the quote:
Other modifications noted in the quote are to be performed by X , including providing an engineer's certificate.
A plan of the proposed changes shows the modifications for the wheelchair and additional passenger seating fills the former cargo hold.
The vehicle supplier has confirmed in writing that the vehicle modified as per the quote will not be able to carry a load of more than one tonne or more than 9 passengers.
Reasons for decision
You propose to purchase a modified commercial vehicle so that you can transport a wheelchair bound family member with the family. You are seeking clarification from the ATO that the modified vehicle will be regarded as a car for income tax purposes.
Section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) defines a car as follows:
'Car means a *motor vehicle (except a motor cycle or similar vehicle) designed to carry a load of less than 1 tonne and fewer than 9 passengers.'
Guidance as to whether a modified commercial vehicle constitutes a 'car' within the meaning of this definition is provided by Miscellaneous Taxation Ruling MT 2033 Fringe benefits tax: application of sub-section 8(2) exemption to modified cars (MT 2033).
Paragraph 5 MT 2033 explains that the first test of a vehicle's classification is determined by the vehicle's inherent design which is generally established at manufacture. The vehicle you propose to purchase is a commercial vehicle which can carry a weight of over 1 tonne and has a driver and single passenger seat with large rear cargo area. You have obtained a quote to modify the vehicle from commercial use into a passenger vehicle for your family that is adapted to accommodate the wheelchair bound family member. Paragraph 7 of MT 2033 provides a test for a modified vehicle that is determined by the permanency of the alterations to a vehicle.
Whether or not modifications to a car satisfy the test in paragraph 7 of MT 2033 turns on the facts of a particular case. However, as a general rule, the requirement that modifications effect a permanent change to the vehicle would be satisfied where they are not capable of being readily reversed such that the vehicle could, if required, be used alternatively as a passenger or non-passenger vehicle on a regular basis. Satisfaction is found in the nature of the modifications themselves that would need to extend throughout the entire vehicle.
The plan provided with your quote for modifications shows changes to the vehicle that convert the former cargo area into passenger seating for five adults, a wheelchair and a wheelchair hoist in the rear. Proposed modifications support the conversion of the cargo hold into passenger seating with safety restraints, second battery, air conditioning and heating facilities, additional windows and power doors on both rear passenger sides, and airbag installation. Modifications to be made to the front driver and passenger seats and the installation of cruise control extend the effect of the changes to the entire vehicle. An engineer's certificate is being provided. We consider that these modifications are permanent and the vehicle will not readily revert to its former commercial status on a regular basis at a later time.
The vehicle provider has provided you with written confirmation the modified vehicle will not be able to carry a load of one tonne or more than nine passengers. The modified vehicle you propose to purchase will therefore meet the definition of a 'car' in section 995-1 of the ITAA 1997 in that it is a motor vehicle designed to carry a load of less than one tonne and fewer than 9 passengers.
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