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Edited version of your private ruling
Authorisation Number: 1012550619637
Ruling
Subject: GST and purchase of a car an eligible veteran
Question 1
Are you entitled to purchase a GST-free car pursuant to section 38-505 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
Yes.
Relevant facts and circumstances
You are a returned serviceman, section 24 of the Veterans Entitlement Act 1986 applies to you and you receive a pension under Part II of that Act. You hold a Gold Card.
You purchased a manual drive car and took advantage of the GST-free status you are afforded as an eligible veteran. The car has not been driven since for some time, having travelled much less than the statutorily required amount. Recently, it has become physically impossible for you to drive the manual. It was your intention at the time of purchase to make this your last car, lasting you for 10 or more years and many thousands of kilometres.
The purchase of an automatic will allow you to drive and do most of the things that you had intended to do with the manual. It is your intention to use the automatic for private use only, for more than 40,000 kilometres and two years.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 38-505
Reasons for decision
Summary
You are entitled to purchase a GST-free car pursuant to section 38-505 of the GST Act.
Detailed reasoning
In the first instance section 38-505 of the GST Act provides for the supply of a GST-free car to you. Section 38-505 of the GST Act allows for the supply of a GST-free car to an individual who has served in the Australian Defence Force and as a result of that service is a veteran to whom section 24 the Veterans Entitlement Act 1986 applies to and who receives a pension under Part II of that Act. You have to intend to use the car for your personal transportation for a statutory period which is currently set at 2 years or 40,000 kilometres.
We note that you have not used your manual car for the statutory period despite having the intention to do so at the time of purchase. The Commissioner's interpretation of section 38-505 of the GST Act allows for a subsequent purchase of a GST-free car where the first purchase was genuinely made with the intention of using the car for the two years/ 40,000 kilometre statutory period and the car is no longer suitable for its intended use. Given you can no longer drive a manual car, we consider that it is no longer suitable for its intended purpose.
This interpretation is reflected in the wording of the preprinted Declaration forms that the Commissioner provides for eligible veterans; the interpretation allows for veterans who have a genuine need to buy a replacement vehicle within the statutory period to do so.
A car purchased GST-free under section 38-505 of the GST Act is only GST-free to the value of the car limit. The 2013-14 car limit is $57,466. You must pay GST on any amount above that limit.
The value of the car you purchase does not include the value of any modifications made solely to adapt the car for you to drive or be driven in.
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