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Edited version of your private ruling
Authorisation Number: 1012519612630
Ruling
Subject: LCT and importation of cars over two year old
Question
What are the luxury car tax (LCT) implications of imported cars where those cars are more than two years old?
Answer
Imported cars that are more than two years old are subject to the LCT tax where their LCT exceeds the LCT threshold.
Relevant facts and circumstances
You are registered for the goods and services tax (GST).
You import delivery cars that have incurred LCT.
You inform us that:
· you import cars that are over two years old and that when GST, customs duty, transportation costs of the car and so on are added the car tips over the LCT threshold and is subject to LCT;
· a 1936 car valued at $68,000 incurs LCT and yet is not a luxury car; and
· the LCT Act has certain exemptions and that LCT does not apply if the car is two years old.
You want to know why imported cars that are more than two years old subject to LCT.
Relevant legislative provisions
The A New Tax System (Luxury Car Tax) Act 1999 section 7-10
The A New Tax System (Luxury Car Tax) Act 1999 section 7-15
The A New Tax System (Luxury Car Tax) Act 1999 section 25-1
The A New Tax System (Luxury Car Tax) Act 1999
The A New Tax System (Luxury Car Tax) Act 1999 paragraph 5-10(2)(b)
The A New Tax System (Luxury Car Tax) Act 1999 subsection 5-10(3)
Reasons for decision
Section 25-1 of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act) provides that a luxury car is a car whose luxury car tax value exceeds the LCT threshold.
Section 7-15 of the LCT Act explains that the LCT value of an imported car includes all of the following:
· the customs value of the car and of any parts, accessories or attachments that are imported at the same time as the car that can reasonably be expected to be fitted to the car (add-ons)
· amounts paid or payable for the international transport of the car and add-ons to Australia
· amounts paid or payable for the insurance of the car and add-ons to be transported to Australia
· any customs duty payable on the importation of the car and add-ons
· any GST payable on the importation of the car and add-ons; and
· if the importation of the car is GST-free, an amount equal to the amount of GST that would otherwise have been payable.
The LCT determination (LCTD 2013/1) provides that the LCT threshold for the 2013-14 financial year is $60,316.
For LCT purposes car means a motor vehicle (except a motor cycle or similar vehicle) that is designed to carry a load of less than two tonnes and fewer than nine passengers or a limousine regardless of the number of passengers it is designed to carry.
Section 7-10 of the LCT Act mentions that an entity makes a taxable importation of a luxury car if the luxury car is imported and is entered for home consumption.
This means that cars with a LCT value over the LCT threshold are considered to be luxury cars for LCT purposes.
Therefore, imported cars, regardless of their age at the time of importation, are considered to be luxury cars, if they are vehicles as described above and their LCT value exceeds the LCT threshold.
Paragraph 5-10(2)(b) of the LCT Act states that you do not make a taxable supply of a luxury car if the car is more than 2 years old.
Subsection 5-10(3) of the LCT Act provides that a car is more than 2 years old if:
· for a car that has not been imported the car was manufactured more than 2 years before the time of supply; or
· the car was entered fore home consumption more than 2 years before the time of supply.
Please note that a car is not subject to LCT if at the time of importation the importer quotes his Australian business number and at the time of quoting has the intention of
· using the car as trading stock, other than holding it for hire or lease; or
· research and development for the manufacturer of the car; or
· exporting the car in circumstances where the export is GST-free under Subdivision 38-E of the GST Act.
However, where a car is sold within 2 years of importation to an end user then it will be subject to LCT.
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