1012815960175 | Legal database

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Edited version of your written advice

Authorisation Number: 1012815960175

Ruling

Subject: GST and the supply of motorhomes to TPI veterans

Question

Is the supply of a motor vehicle that is designed to carry less than nine passengers and has a load carrying capacity of less than one tonne a GST-free supply where it is supplied to a Veteran with a TPI certificate?

Answer

A motor vehicle that is designed to carry less than nine passengers and has a load carrying capacity of less than one tonne is considered as a car. Therefore, where a motor vehicle that is a car is supplied to a veteran with a TPI certificate that supply is a GST-free supply where the other requirements of section 38- 305 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) are satisfied. However, the supply is not GST-free to the extent that the GST inclusive market value of the motor vehicle exceeds the car limit.

Relevant facts and circumstances

You are registered for the goods and services tax (GST) and supply motor vehicles in the course of your enterprise.

The motor vehicles that you sell:

- are built on a light truck chassis,

- are designed to carry four passengers,

- have a load carrying capacity of less than one tonne.

The GST inclusive market value of the motor vehicles exceeds the car limit.

Relevant legislative provisions

Section 38-305 of the A New Tax System (Goods and Services Tax) Act 1999

Reasons for decision

Section 38-305 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) 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

(2) However, a supply covered by subsection (1) is not GST-free to the extent that the *GST inclusive market value of the *car exceeds the *car limit.

(terms marked with asterisks (*) are defined in section 195-1 of the GST Act)

Therefore if the supply of motor vehicles that you sell comes within the definition of a car and meets the other requirements of section 38-305 of the GST Act, it will be a GST-free supply. In this regard, what needs to be determined is whether a motorhome is a car.

Section 195-1 of the GST Act provides that 'car for GST purposes has the meaning given by section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997). ITAA 1997 defines a car as follows:

car means 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.

Further, the ITAA defines a motor vehicle as follows:

motor vehicle means any motor-powered road vehicle (including a 4 wheel drive vehicle).

As the motor vehicles that you supply are designed to carry a load of less than one tonne and fewer than 9 passengers, the motor vehicles that you sell are considered as cars.

Motor vehicles that are designed to carry a load of less than one tonne and fewer than 9 passengers are considered as cars.

Accordingly, even though the motor vehicles that you sell are built on light truck chassis, if they come within the definition of a car, the supply of these motor vehicles will be GST-free where the requirements of section 38-305 of the GST Act are satisfied. However, pursuant to subsection 38-305(2) of the GST Act, the amount of the GST inclusive market value of the motor vehicles that exceeds the car limit will not be GST-free.

The following is provided for your information:

You are a veteran with a disability for GST purposes if you have served in the Australian Defence Force or any other Commonwealth armed force and as a result of that service:

• has lost a leg or both arms; or

• has had a leg or both arms rendered permanently and completely useless; or

• is a veteran to whom section 24 of the Veterans' Entitlements Act1986 applies and receives a pension under Part II of that Act; or

• is receiving a Special Rate Disability Pension; and

• intends to use the car in your personal transportation.

The eligibility criteria are defined by section 38-505 of the A New Tax System (Goods and Services Tax) Act 1999. To show that you are eligible, you can either:

• use your gold repatriation health card (embossed 'TPI'), or

• obtain a certificate from the Department of Veterans' Affairs External Link confirming that you are eligible.

Even if you have a gold repatriation health card, you cannot purchase a car GST-free if you are any of the following:

• a cadet

• a cadet's officer

• a cadet's instructor

• a 'declared member'.

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