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Edited version of private ruling
Authorisation Number: 1011509319574
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Ruling
Subject: LCT and fuel efficient LCT threshold
Question
Does your vehicle fall within the luxury car tax (LCT) limit for fuel efficient cars, being $75,375 for 2010/2011, and therefore would not be subject to LCT under subsection 25-1(4) of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act)?
Answer
Yes, your vehicle falls within the LCT limit for fuel efficient cars, being $75,375 for 2010/2011, and is therefore not subject to LCT under subsection 25-1(4) of the LCT Act?
Facts
You are registered for goods and services tax (GST).
You are introducing a vehicle to the Australian market.
The vehicles will be made available by way of sale and leasing arrangements.
It is intended that the vehicle will be sold to customers for a retail price of less than $75,375 (inclusive of GST).
The vehicle has an electric motor that runs solely off electricity produced from high capacity lithium-ion batteries.
The vehicle consumes 0 km/L of petrol and produces no carbon dioxide when operated.
The vehicle is rear wheel drive and has XXXNm of torque and achieves a top speed of XXX km/h.
The vehicle seats up to 4 adults.
The vehicle is not designed to carry loads of 2 tonnes or greater.
Relevant legislative provisions
A New Tax System (Luxury Car Tax) Act 1999 Paragraph 5-20(1)(a)
A New Tax System (Luxury Car Tax) Act 1999 Subsection 25-1(4)
A New Tax System (Luxury Car Tax) Act 1999 Subsection 25(1)(5)
A New Tax System (Luxury Car Tax) Act 1999 Section 27-1
Reasons for decision
Section 5-5 of the LCT Act provides that you must pay the LCT payable on any taxable supply of a luxury car that you make.
Section 27-1 of the LCT Act defines a car as:
car means a *motor vehicle (except a motor cycle or similar vehicle) that is:
(a) designed to carry a load of less than 2 tonnes and fewer than 9 passengers; or
(b) a limousine (regardless of the number of passengers it is designed to carry).
*Asterisked terms are defined in the LCT dictionary at section 27-1 of the LCT Act.
As the vehicle is a motor powered 2 wheel drive road vehicle that is designed to carry a load less than 2 tonnes and a maximum of 4 passengers, the vehicle satisfies the definition of 'car' under the LCT Act.
Subsection 25-1(1) of the LCT Act provides that a luxury car is a car whose LCT value exceeds the LCT threshold.
Subsection 5-20(1) of the LCT Act is about LCT value:
In relation to the supply of a *car, the luxury car tax value is the *price of the car excluding:
(a) any luxury car tax for that supply; and
(b) any other *Australian tax, fee or charge, other than *GST and *customs duty;
payable on the supply.
In this case, the LCT value for the vehicle is less than $75,375 for both sold and leased vehicles.
Subsection 25-1(4) of the LCT Act is about the LCT threshold for fuel efficient cars:
If the *car has a fuel consumption not exceeding 7 litres per 100 kilometres as a combined rating under vehicle standards in force under section 7 of the Motor Vehicle Standards Act 1989, the luxury car tax threshold is the *fuel-efficient car limit for the year in which the supply of the car occurred or the car was *entered for home consumption.
In line with the policy intent of the luxury car tax threshold provisions, our opinion is that by virtue of subsection 25-1(4) of the LCT Act, the LCT threshold applicable to the vehicle is the fuel-efficient car limit.
Paragraph 1 of the Luxury Car Tax Determination LCTD 2010/1 Luxury car tax: what is the luxury car tax threshold and the fuel-efficient car limit for the 2010-11 financial year? (LCTD 2010/1) provides that the fuel-efficient car limit for the 2010-11 financial year is $75,375.
Accordingly, the vehicle falls within the LCT limit for fuel efficient cars (being $75,375) for 2010/2011 and is therefore not subject to LCT.
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