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Subject: LCT on a particular imported vehicle

Questions

Decisions

• More than two years ago, Dealer X imported a high value vehicle without paying LCT. They sold the vehicle to another dealer without charging LCT. You do not know the name of that dealer.

• That dealer has sold the vehicle to a company. You do not know whether that dealer charged LCT to the company.

• The company has gone into liquidation. The liquidator has organised an auction for this vehicle. You are planning to purchase this vehicle at the auction for about $Y.

• If you succeed in purchasing the vehicle at the auction, you plan to sell the vehicle to one of your clients.

A New Tax System (Luxury Car Tax) Act 1999 (LCT Act):

Section 5-10

Section 9-5

Section 5-10 of the Luxury Car Tax Act provides that;

Section 9-1 of the LCT Act provides that in certain circumstances you can quote for a supply or importation of a luxury car and not pay the luxury car tax. This is designed to avoid the luxury car tax becoming payable unless the car is sold or imported at the retail level.

Section 9-5 of the LCT Act provides that:

When Dealer X sold the car to the other dealer, if the other dealer quoted for it, Dealer X did not incur an LCT liability. You will have to verify this fact.

When the other dealer sold the vehicle to the company, if the company purchased it for its own use, the other dealer incurred an LCT liability on it. The dealer would have charged this amount to the company. You will have to verify this fact from the liquidator of the company.

As per the facts, at the time of the auction of the vehicle, it will be over two years old from the date of entry for home consumption. Therefore, the liquidator will not make a taxable supply of a luxury car.

If you purchase this vehicle at the auction and sell it to your client, as it is over two years old from the date of entry for home consumption, you will not incur an LCT liability on it.

As you have not provided all the necessary facts, we cannot provide precise advice. You will have to verify the exact date of entry of this vehicle for home consumption and the LCT paid at each previous transaction involving this vehicle, if any.


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