| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012364581184
This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.
Ruling
Subject: Luxury car tax (LCT) and the importation and sale of a motor vehicle
Question 1
Will LCT be payable on your sale of the motor vehicle?
Answer
LCT will be payable on your sale of the motor vehicle if the price you sell it for (excluding LCT and other Australian taxes, fees and charges other than GST and customs duty) exceeds the LCT threshold (which is currently $59,133). Otherwise, LCT will not be payable on your sale of the motor vehicle.
Question 2
Will LCT be payable on your importation of the motor vehicle?
Answer
LCT will not be payable on your importation of the motor vehicle if the LCT value of the vehicle in relation to your importation of the vehicle does not exceed the LCT threshold.
LCT will not be payable on your importation of the motor vehicle if the LCT value of the vehicle in relation to your importation of the vehicle exceeds the LCT threshold, but you quote your ABN.
LCT will be payable on your importation of the motor vehicle if the LCT value of the vehicle in relation to your importation of the vehicle exceeds the LCT threshold and you do not quote your ABN.
Relevant facts and circumstances
You are registered for goods and services tax (GST).
You plan to import a motor vehicle into Australia and distribute them within Australia. You will enter the motor vehicle for home consumption.
You may sell the motor vehicle for over $59,133.
You will sell each motor vehicle earlier than 2 years after you enter it for home consumption.
The motor vehicle is not a racing or rally vehicle. The motor vehicle is a road vehicle. It can be registered for use on public roads.
The motor vehicle consumes a certain amount of fuel per kilometre.
Relevant legislative provisions
A New Tax System (Luxury Car Tax) Act 1999 subsection 5-10(1)
A New Tax System (Luxury Car Tax) Act 1999 subsection 5-10(2)
A New Tax System (Luxury Car Tax) Act 1999 subsection 5-10(3)
A New Tax System (Luxury Car Tax) Act 1999 subsection 5-20(1)
A New Tax System (Luxury Car Tax) Act 1999 section 7-10
A New Tax System (Luxury Car Tax) Act 1999 subsection 7-15(1)
A New Tax System (Luxury Car Tax) Act 1999 section 9-5
A New Tax System (Luxury Car Tax) Act 1999 subsection 25-1(1)
A New Tax System (Luxury Car Tax) Act 1999 section 27-1
Reasons for decisions
Question 1
Summary
LCT will be payable on your sale of the motor vehicle if the price you sell it for (excluding LCT and other Australian taxes, fees and charges other than GST and customs duty) exceeds the LCT threshold of $59,133 because under such circumstances:
· you will supply a luxury car
· the supply would be made in the course or furtherance of an enterprise that you carry
· the supply would be connected with Australia
· you are registered for GST, and
· none of the exceptions in subsection 5-10(2) of the LCT Act apply.
Otherwise, LCT will not be payable on your sale of the motor vehicle because it would not be a sale of a luxury car.
Detailed reasoning
You must pay the LCT on any taxable supply of a luxury car that you make.
You make a taxable supply of a luxury car if you satisfy the requirements of subsection 5-10(1) of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act) and the exceptions in subsection 5-10(2) of the LCT Act do not apply.
Subsection 5-10(1) of the LCT Act states:
You make a taxable supply of a luxury car if:
(a) you supply a *luxury car; and
(b) the supply is made in the course or furtherance of an *enterprise that you *carry
on; and
(c) the supply is *connected with Australia; and
(d) you are * registered, or *required to be registered.
Registered or required to be registered for the purposes of paragraph 9-5(d) of the LCT Act means registered or required to be registered for GST.
Subsection 5-10(2) of the LCT Act states:
(2) However, you do not make a taxable supply of a luxury car if:
(a) the *recipient *quotes for the supply of the car; or
(b) the car is * more than 2 years old; or
(c) you export the car in circumstances where the export is * GST-free under Subdivision 38-E of the * GST Act.
The GST Act is the A New Tax System (Goods and Services Tax) Act 1999.
Subsection 5-10(3) of the LCT Act states:
A *car is more than 2 years old at the time of a supply if:
(a) for a car that has not been imported - the car was manufactured more
than 2 years before the time of the supply; or
(b) the car was entered for home consumption more than 2 years before the
time of supply.
We shall firstly consider whether the vehicle in your case is a luxury car.
Subsection 25-1(1) of the LCT Act provides that a luxury car is a car whose LCT value exceeds the LCT threshold, which is currently $59,133.
Section 27-1 of the LCT Act defines the term car. It provides that 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).
Section 27-1 of the LCT Act defines motor vehicle as a motor powered road vehicle (including a 4 wheel drive vehicle).
The motor vehicle is a motor-powered road vehicle.
The motor vehicle is not a motor cycle or similar vehicle.
The motor vehicle is designed to carry a load of less than 2 tonnes and fewer than 9 passengers.
Therefore, the motor vehicle is a car. Hence, the motor vehicle will be a luxury car if its LCT value exceeds the LCT threshold, which is currently $59,133.
In accordance with section 27-1 of the LCT Act, the LCT value of a car means:
(a) in relation to the supply of the car--the value given by section 5-20 of the
LCT Act; or
(b) in relation to the importation of the car--the value given by section 7-15 of
the LCT Act.
Subsection 5-20(1) of the LCT Act states:
In relation to the supply of a *car, the LCT value is the *price of the car excluding:
(a) any LCT for that supply; and
(b) any other *Australian tax or *Australian fee or charge, other than *GST and
*customs duty;
payable on the supply
If the price you sell the motor vehicle for (excluding LCT and other Australian taxes, fees or charges other than GST and customs duty) exceeds the LCT threshold of $59,133, you will be selling a luxury car. In such circumstances, the requirement of paragraph 5-10(1)(a) of the LCT Act will be satisfied.
You will sell the motor vehicle in the course or furtherance of an enterprise that you carry on. Therefore, the requirement of paragraph 9-5(b) of the LCT Act will be satisfied if you sell a luxury car.
Your supplies of the motor vehicle will be connected with Australia. Therefore, the requirement of paragraph 9-5(c) of the LCT Act will be satisfied if you sell a luxury car.
You are registered for GST. Therefore, the requirement of paragraph 9-5(d) of the LCT Act will be satisfied.
None of the exceptions in subsection 5-10(2) of the LCT Act apply.
Hence if the price you sell the motor vehicle for (excluding LCT and other Australian taxes, fees or charges other than GST and customs duty) exceeds the LCT threshold of $59,133, you will make taxable supplies of luxury cars. Under such circumstances, LCT will therefore be payable on your sales of the motor vehicle.
If the price you sell the motor vehicle for (excluding LCT and other Australian taxes, fees or charges other than GST and customs duty) does not exceed the LCT threshold of $59,133, you will not make taxable supplies of luxury cars. Under such circumstances, LCT will therefore not be payable on your sales of the motor vehicle.
Question 2
Summary
LCT will not be payable on your importation of the motor vehicle if the LCT value of the vehicle in relation to your importation of the vehicle does not exceed the LCT threshold of $59,133, as you would not be importing a luxury car in such circumstances.
LCT will not be payable on your importation of the motor vehicle if the LCT value of the vehicle in relation to your importation of the vehicle exceeds the LCT threshold of $59,133, but you quote your ABN, because LCT is not payable on the importation of a luxury car if the importer quotes their ABN.
LCT will be payable on your importation of the motor vehicle if the LCT value of the vehicle in relation to your importation of the vehicle exceeds the LCT threshold of $59,133 and you do not quote your ABN as under such circumstances you would be importing a luxury car and no exceptions in subsection 7-10(3) of the LCT Act would apply.
Detailed reasoning
You must pay the LCT payable on any taxable importation of a luxury car that you make.
You make a taxable importation of a luxury car if the requirements of section 7-10 of the LCT Act are satisfied. Section 7-10 of the LCT Act states:
(1) You make a taxable importation of a luxury car if:
(a) the *luxury car is *imported; and
(b) you *enter the car for home consumption
(2) The *importation of the car includes any *car parts, accessories or attachments
that you import at the same time as the car and that could reasonably be expected to be fitted to the car.
(3) However, you do not make a taxable importation of a luxury car if:
(a) you *quote for the *importation of the *car; or
(b) LCT has already become payable in respect of the car; or
(c) the car is covered by item 4, 8, 15, 18A, 18B, 18C, 21 or 24 in Schedule 4 to
he Customs Tariff; or
(d) the importation of the car is a *non-taxable importation
(4) To avoid doubt, a reference to a car that is covered by an item in Schedule 4 to the Customs Tariff includes a reference to a car to which that item would apply apart from the operation of subsection 18(1) of the Customs Tariff Act 1995 .
Subsection 7-15(1) of the LCT Act provides that the LCT value in relation to the importation of a car is the sum of:
(a) the customs value (for the purposes of Division 2 of Part VIII of the Customs Act 1901)
of the car and of any *car parts, accessories or attachments covered by subsection 7-10(2) of the LCT Act; and
(b) the amount paid or payable:
(i) for the *international transport of the car and any car parts, accessories or
attachments covered by subsection 7-10(2) of the LCT Act to their *place of consignment in Australia; and
(ii) to insure the car and any car parts, accessories or attachments covered by subsection 7-10(2) for that transport;
to the extent that the amount is not already included under paragraph (a); and
(c) any *customs duty payable in respect of the *importation of the car and of
any car parts, accessories or attachments covered by subsection 7-10(2); and
(d) any *GST payable in respect of the importation of the car and of any car
parts, accessories or attachments covered by subsection 7-10(2) of the LCT Act; and
(e) if the importation of the car is *GST-free (to an extent) because of paragraph 13-10(b) of the *GST Act in conjunction with Subdivision 38-P of that Act-an amount equal to the amount of *GST that was not payable because of paragraph 13-10(b) of the GST Act and Subdivision 38-P of that Act.
In accordance with section 9-5 of the LCT Act, you are entitled to quote your ABN in relation to an importation of a luxury car if, at the time quoting, you have the intention of using the car for the purpose of holding as trading stock, other than holding it for hire or lease. However, you are not entitled to quote unless you are registered for GST.
The motor vehicle will be imported and you will enter them for home consumption.
If the LCT value in relation to your importation of the motor vehicle does not exceed the LCT threshold of $59,133, you will not be importing a luxury car. Hence, under such circumstances, you would not make a taxable importation for LCT purposes. Therefore, under such circumstances, LCT would not be payable on the importation.
If the LCT value in relation to your importation of the motor vehicle exceeds the LCT threshold of $59,133, you will be importing a luxury car. Therefore, you would satisfy the requirement of paragraph 7-10(1)(a) of the LCT Act under such circumstances.
You will enter the motor vehicle for home consumption. Therefore, you would satisfy the requirement of paragraph 7-10(1)(b) of the LCT Act if the LCT value in relation to your importation of the motor vehicle exceeds the LCT threshold of $59,133.
You will be entitled to quote your ABN in relation to your importation of the motor vehicle because at that time you will have the intention of holding the car as trading stock, other than holding it for hire or lease and you are registered for GST. Therefore, if the LCT value in relation to your importation of the motor vehicle exceeds the LCT threshold of $59,133, but you quote your ABN, your importation of the motor vehicle would still not be a taxable importation. Hence, under such circumstances, LCT would not be payable on the importation.
If the LCT value in relation to your importation of the motor vehicle exceeds the LCT threshold of $59,133 and you do not quote your ABN, you would make a taxable importation as a luxury car would be imported; you would enter the car for home consumption and none of the exceptions in subsection 7-10(3) of the LCT Act would apply. Hence, under such circumstances, LCT would be payable on the importation.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
