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Edited version of your written advice
Authorisation Number: 1012819042858
Ruling
Subject: GST and purchase of car by a disabled person
Question
Based on the information you provided, can you be exempted from paying goods and services tax (GST) on the car you purchased from the car dealer due to your medical conditions and the car is required to keep you employed?
Advice
No, based on the information you provided you cannot be exempted from paying GST on the car you purchased because at the time of purchase, you did not satisfy the requirements in paragraph 38-510(1)(a) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
Note: in the event you have satisfied the requirements in subsection 38-510(1) of the GST Act at the time of purchase, you would still be required to pay some GST as the price of the purchased car is above the car limit under subsection 38-510(2) of the GST Act.
Relevant fact
You are an individual and your health conditions prevent you from catching public transport.
As you require a car to keep you gainfully employed, you have purchased a car from a car dealer and the total amount you paid for the car is above the car limit for a GST-free car provided in subsection 38-510(2) of the GST Act. You paid GST at the time of the purchase. You have provided us with a copy of the tax invoice.
At the time you purchased the car you did not have a current disability certificate from your health fund, part of the Health Services Australia Group certifying you have a medical condition where you are unable to use public transport. As at the time of your ruling application you do not hold a current disability certificate from your health fund.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 38-510
Reasons for decision
The fact sheet 'GST and LCT on cars you buy - people with disabilities' (which is available from www.ato.gov.au) explains when a person with a disability can purchase a car GST-free under section 38-510 of the GST Act.
Under subsection 38-510(1) of the GST Act, a supply is GST-free if it is a supply of a car to an individual who:
a) currently has a current disability certificate issued by:
i. the person holding the position of Managing Director of the nominated company (within the meaning of Part 2 of the Hearing Services and AGHS Reform Act 1997); or
ii. an officer of employee of that company who is authorised in writing by the Managing Director for the purposes of this section;
certifying that the individual has lost the use of one or more limbs to such an extent that he or she is unable to use public transport; and
b) Intends to use the car in his or her personal transportation to or from gainful employment during all of the subdivision 38-P period.
Currently it is the Medibank Health Solutions (MHS) part of the Health Services Australia Group that supplies the disability certificate required under paragraph 38-510(1)(a) of the GST Act.
The requirement in paragraph 38-510(1)(b) of the GST Act is the individual will use the car to travel to or from gainful employment for either two years or 40,000 kilometres from the date of purchase.
However, under subsection 38-510(2) of the GST Act there is a car limit value for the GST-free car. For the 2014-2015 year the limit is $57,466 and for any amount above the car limit, GST is applicable.
From the information received you did not hold a current disability certificate issued by MHS certifying that you have a specific medical condition to such an extent that you are unable to use public transport at the time of purchase and, currently you do not have a disability certificate from MHS.
In this instance you do not satisfy the requirements in paragraph 38-510(1)(a) of the GST Act and, there is no provision in the GST Act that allows the Commissioner to exercise his discretion to exempt you from not paying GST at the time of purchase when the requirements in subsection 38-510(1) of the GST Act are not met.
You therefore were liable to pay GST at the time you purchase the car from the car dealer in 1994.
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