Edited version of your private ruling

Authorisation Number: 1012473780662

Ruling

Subject: Cars for use by disabled people - disabled veterans

Question 1

Will the Commissioner allow you to purchase a vehicle GST-free, even though you have already purchased a vehicle GST free and the Subdivision 38-P period has not yet expired?

Answer

Yes, you can purchase the vehicle GST-free.

Relevant facts and circumstances

· You purchased a vehicle GST-free in 2012.

· You are Totally and Permanently Incapacitated (TPI) veteran to whom section 38-505 of the GST Act applies.

· You have had to trade in the vehicle in order to purchase a new vehicle that is more suited to your needs. You now wish to purchase another vehicle that has rear wheelchair access, and could allow for the transport of a wheelchair and two wheel walkers.

· You owned the relevant vehicle for less than two years, and it covered less than 40,000 kilometres.

· You intended to use the relevant vehicle for your personal transportation for two years or 40,000 kilometres. You intend to use the other vehicle for your personal transportation for two years or 40,000 kilometres.

· You wish to confirm that you are entitled to purchase the other vehicle GST-free.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999

Section 38-505

Section 195-1

Reasons for decision

Under Subdivision 38-P of the A New Tax System (Goods and Services Tax Act) 1999 (GST Act), a supply of a car to a disabled person may be GST-free. Subsection 38-505(1) of the GST Act deals with the supply of a car to disabled veterans. This section states:

(1) A supply is GST-free if it is a supply of a *car to an individual who:

(a)     has served in the Defence Force or in any other armed force of Her Majesty; and

(b)     as a result of that service:

(i) has lost a leg or both arms; or

(ii) has had a leg, or both arms, rendered permanently and completely useless; or

(iii) is a veteran to whom section 24 of the Veterans Entitlements Act 1986 applies and receives a pension under Part II of that Act; or

(iv) is receiving a Special Rate Disability Pension under Part 6 of Chapter 4 of the Military Rehabilitation and Compensation Act 2004, or satisfies the eligibility criteria in section 199 of that Act; and

(c)     intends to use the car in his or her personal transportation during all of the *Subdivision 38-P period.

(Items marked with an asterisk (*) are defined in the Dictionary at section 195-1 of the GST Act).

You have served in the Defence Force and now receive a TPI pension from the Department of Veterans Affairs, so you are eligible for the abovementioned concession.

A car is defined as "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". (Section 995-1 of the ITAA Act).

Furthermore, a motor vehicle "means any motor-powered road vehicle (including a 4 wheel drive vehicle)" (Section 995-1 of the ITAA Act).

The term "Subdivision 38-P period" referred to in paragraph 38-505(1)(c) is defined in section 195-1 of the GST Act as the period starting from when an individual acquires the car and ending at the earliest of the following times:

(a)  the end of 2 years after the acquisition;

(b)     the time when the car is no longer reasonably capable of being used for the purpose for which cars of that kind are ordinarily used;

(c)     a time that the Commissioner considers to be appropriate in special circumstances.

The Commissioner considers that an appropriate circumstance is where the vehicle has travelled 40,000 kilometres.

Where an individual purchasing a car intends to use the car for personal transportation for a period of two years or until the car has travelled 40,000 kilometres, the requirements of subsection 38-505(1) of the GST Act will be satisfied and the supply of the car will be a GST-free supply of a car under this subsection.

However, you have advised that you purchased a vehicle GST-free in accordance with the abovementioned concession, but the Subdivision 38-P period has not yet expired. However, the vehicle you purchased is no longer suitable for your needs; you now need to purchase another vehicle which has been fitted with a wheelchair lift. The cost of the vehicle to you is approximately $22,000.

You have advised that you intend to use the new vehicle for at least two years for your personal transportation. However, you will be trading in your present vehicle, for which the Subdivision 38-P period has not yet expired.

It is noted that it does not matter if you subsequently sell or trade in the car prior to the end of the Subdivision 38-P period. It is the intention at the time of the acquisition that determines the GST status of the supply.

You initially intended to use the initial vehicle for the duration of the Subdivision 38-P period. However, it is no longer suitable. Accordingly, you can trade it in and purchase a new vehicle GST-free, as long as you intend to keep the new vehicle for the duration of the Subdivision 38-P period.

For completeness, we note that subsection 38-505(2) of the GST Act limits the GST-free component of the vehicle to the amount that is below the car limit. The car limit is $57,466 for the 2013 financial year. As the value of the relevant vehicle is well below this limit, subsection 38-505(2) does not apply.

You, as the purchaser, should complete the Declaration to the Commissioner of Taxation Exemption of GST for vehicle or vehicle parts disabled veteran (NAT 3418-04.2009) and give the completed form to the car dealer when you purchase the car. I have enclosed a copy of this form.

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