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Edited version of your private ruling
Authorisation Number: 1012449999782
Ruling
Subject: Luxury car tax
Question 1
What is the difference between the A series vehicle and the B Series vehicles which were ruled as commercial vehicles by the Australian Taxation Office (ATO)?
Answer
The ATO is not in a position to tell about the difference between the A series vehicle and the B Series vehicles which were ruled as commercial vehicles by the ATO. This question can only be answered by the manufacturer of the vehicles.
Question 2
Is the A series vehicle a commercial vehicle and therefore not subject to Luxury car tax (LCT)?
Answer
We do not consider the A series vehicle to be a commercial vehicle. Therefore, as the A series has a GST-inclusive value above the LCT threshold it is considered to be a luxury car subject to LCT.
Relevant facts and circumstances
You are an entity registered for the goods and services tax (GST).
You are purchasing an A series vehicle for your business.
In your application for a private ruling you mentioned that LCT does not apply to commercial vehicles.
You also provided the following information:
o the A series vehicle is Fringe Benefits Tax exempt
Appearance:
o steel wheels, air snorkel, no carpet, barn doors, few options, bash plates
Specifications:
o V8 turbo diesel, 4x4
Passengers:
o 5 - no third row seats
You also supplied us two pages of a leaflet which contains the following promotional information:
o the A series vehicle has all the features to protect your employee
o you need a no-fuss workhorse when there's a real job to be done
o the A series vehicle gives your business everything it'll need to take on the tough jobs with all the safety and comfort you'd expect
o the A series vehicle is renowned for its powerful torque
o the addition of vertically hinged twin barn doors allows loading directly from a forklift
o the full-time 4WD underbody protection plates and vinyl floors- making the A series vehicle perfect for industry.
The electronic brochure on the official website for the A series vehicle provides the following information:
o the A series vehicle consumes more than 7 litres of fuel per 100km
o the A series vehicle is designed to carry a load of less than two tonnes and five passengers.
The A series vehicle is priced above the LCT threshold of $59,133.
Relevant legislative provisions
A New Tax System (Luxury Car Tax) Act 1999 Subsection 25-1(4)
Reasons for decision
1. In your application for a private ruling you asked us about the difference between the A series vehicle and the B series vehicles which have been ruled as commercial vehicles by the ATO.
The ruling that you referred to in your application for a private ruling sets out the Commissioner's opinion in relation to the B series vehicles.
The ruling relating to the B series vehicles was issued by the Commissioner based on the precise scheme identified in the ruling. The Commissioner's view expressed in the ruling is based on the information provided in confidence by the applicant.
The ATO is not in a position to tell about the difference between vehicles produced by a manufacturer. This question can only be answered by the manufacturer of the vehicles.
2. You also want to know whether the A series vehicle is subject to LCT.
The Guide to Luxury car Tax (NAT 3394) provides that a luxury car is a car with a GST-inclusive value above the LCT threshold which in 2012-13 is:
· $75,375 for fuel-efficient cars, and
· $59,133 for other cars.
NAT 3394 mentions that under LCT law, a car is a motor-powered road vehicle that is designed to carry a load of less than two tonnes, and less than nine passengers.
NAT 3394 also provides that the term 'car' includes passenger cars, station wagons, and four-wheel drive vehicles.
The A series vehicle is a four-wheel drive vehicle and is designed to carry five passengers and a load of less than two tonnes.
Therefore, the A series vehicle is considered to be a car for LCT purposes.
Subsection 25-1(4) of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act) mentions that if a car has a fuel consumption not exceeding 7 litres per 100 kilometres then the car is a fuel efficient car and the LCT threshold for such a vehicle is $75,375.
According to the electronic brochure posted on the official website, the A series vehicle consumes more than 7 litres of fuel per 100km. Therefore, the A series vehicle is not a fuel efficient car and the LCT threshold for such a car is $59,133.
The A series vehicle is priced above the LCT threshold of $59,133.
What is a commercial vehicle?
According to NAT 3394, for LCT purposes, a commercial vehicle is a vehicle designed for the principal purpose of carrying goods used for business or trade and is not subject to LCT.
These vehicles include trucks, hearses and some vans.
NAT3394 also provides that vehicles designed mainly for carrying passengers (including paying passengers), or for sport or recreation purposes, are not commercial vehicles and you may have to pay LCT on them.
These vehicles include
· station wagons
· passenger sedans
· people movers
· sports utility vehicles (SUVs).
The following paragraph has been reproduced from NAT 3394:
VEHICLES THAT CARRY BOTH PASSENGERS AND GOODS
Some vehicles with a load carrying capacity of less than two tonnes can be designed to carry both passengers and goods (that is a dual purpose).
These vehicles include:
· dual cab vehicles
· crew cab vehicles
· utility vehicles.
We note that the A series vehicle is none of the above.
You have provided some information in the form of a couple of pages from a leaflet. During a phone conversation with a ATO Officer you were told that we could not find the information relating to the leaflet you provided us on the A series vehicle's official website. You informed that you obtained the information from the A series vehicle Fleet sale Dept and that you had not seen such information anywhere else.
We did a search under the A series vehicle's official website and still could not find the information as per the couple of pages provided.
At this point in time we do not consider the A series vehicle to be a vehicle designed to carry both passengers and goods. Our view is that the A series vehicle is a passenger vehicle. Therefore, as the A series vehicle has a GST-inclusive value above the LCT threshold it is considered to be a luxury car subject to the LCT. As stated above the LCT threshold for the A series vehicle is $59,133.
Note: The decision made by the ATO in relation to the B series vehicles was based on specific information provided by the applicant. In this case we are not in possession of specific information from the manufacturer that will allow us to classify the A series vehicle as being commercial.
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