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Edited version of your private ruling

Authorisation Number: 1012204331708

Ruling

Subject: GST and refund of GST on car parts for totally and permanently incapacitated veterans

Question

Can you obtain from the ATO a refund of the goods and services tax (GST) paid by you on the particular parts used on your car?

Decision

No, as you have not paid GST directly to the ATO, you cannot obtain a refund of GST from the ATO. However, you may be able to obtain a refund from the relevant suppliers of the parts.

Relevant facts and circumstances

You are a totally and permanently incapacitated veteran.

Once in every two years, you are eligible to purchase a car for your use GST-free. You were of the opinion that you could purchase parts for the car GST-free.

Recently you have bought a car GST-free for your own use. You have taken that car for servicing and repairs. The garages have charged you GST on the parts. You have submitted tax invoices issued by the garages for the particular parts supplied.

The relevant garages have refused to refund the GST charged to you. You want the ATO to refund to you the GST charged on the particular car parts.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 - section 38-510

Reasons for the decision

Subsection 38-510(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that a supply is GST-free if it is a supply of a car to an individual, who has a relevant current disability certificate.

Subsection 38-510(4) of the GST Act provides that a supply is GST-free, if it is a supply of car parts that are for a car for an individual to whom paragraph (1)(a) and (b) applies.

The Fact Sheet NAT 4325-05.2012 - GST and LCT on cars you buy (fact sheet) refers to cars and car parts bought by eligible people with disabilities. As indicated below, it states that if you are eligible to purchase a car GST-free, you are also entitled to purchase car parts GST-free. The fact sheet gives details of the type of car parts that you can purchase GST-free.

Car parts

If you are eligible to purchase a car GST-free, you are also entitled to purchase car parts GST-free.

Car parts include items such as:

Items that are not car parts are not GST-free. These include:

Accessories are not car parts and are not GST-free. These include:

Parts that are not specifically for cars are not GST-free car parts. For example, parts specifically for trucks, vans, buses, motor cycles and other machinery.

Car parts purchased by a business to on-sell to eligible people are not GST-free. The business must pay GST when it buys the car parts and can later claim a GST credit (if registered for GST). The business can then sell the car parts GST-free to eligible people.

Car parts supplied to you during a repair of your car and the cost of labour services in fitting those parts to your car are GST-free. This is because the supply of car parts and labour to an eligible disabled person are treated as a single GST-free 'sale of car parts'.

If car parts are supplied to you when you service your car, and those parts are integral to the servicing of your car (for example, spark plugs fitted in the course of a service), those parts and the labour services in fitting those parts are not GST-free. A car service, which typically involves mostly labour services with some integral parts such as spark plugs or filters, is a taxable sale and will incur GST.

Example 1: GST-free sale of car parts

John has a current disability certificate. He goes to an automotive parts and accessories store where he purchases spark plugs and brake pads for his car. The sale of spark plugs and brake pads is a GST-free sale of car parts. If John later has the spark plugs and brake pads fitted by a mechanic, the labour will be a taxable sale because it is a separate supply of labour, not a sale of car parts.

Example 2: GST-free sale of car parts including labour for fitting the parts

Justine sells tyres to Madge for a price that includes the cost of the labour associated with fitting and balancing the tyres. Madge also needs the brake pads in her car replaced. Madge has a current disability certificate. The sale and fitting of the tyres and the brake pads are a GST-free supply of car parts.

Example 3: Taxable car parts sold as part of a service

Anna has a current disability certificate. She takes her car to the mechanic for a routine service. In the course of the service, the mechanic changes the spark plugs in Anna's car. The sale of spark plugs is integral to the car service and as such is not a GST-free sale of car parts, but a taxable supply of labour services.

Example 4: GST-free sale of car parts including labour in fitting those parts made during a car service

Jim has a current disability certificate. He takes his car to the mechanic for a routine service, including changing the spark plugs. During the course of the service, the mechanic finds that the exhaust system needs to be replaced. While the service itself including the fitting of spark plugs is not a GST-free sale of car parts, the sale and fitting of the exhaust system is GST-free.

Documents you must show to the car dealer or car part supplier

If you buy or lease a car, or purchase car parts GST-free, you must show the supplier either of the following:

If you are an eligible veteran with a disability, you can also obtain an approved form from the Department of Veterans' Affairs.

Car parts purchased by you

A list of the particular car parts purchased by you indicates that they may qualify as GST-free supplies. However, as we do not have expertise in car parts, you are advised to show the above fact sheet and declarations to the relevant suppliers and obtain a refund of the GST, if possible. As you have not directly paid the GST to the ATO, we are not in a position to refund any GST directly to you.

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