ATO Interpretative Decision
ATO ID 2002/121 (Withdrawn)
Goods and Services Tax
GST and gainful employment and the purchase of a car for a person with disabilitiesFOI status: may be released
-
This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, a car dealer, making a GST-free supply under section 38-510 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies a car to a person with disabilities who is not currently undertaking paid work?
Decision
No, the entity is not making a GST-free supply under section 38-510 of the GST Act when it supplies a car to a person with disabilities who is not currently undertaking paid work. The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a car dealer. The entity is supplying a car to a person with disabilities. The person with disabilities has a current disability certificate issued by the Managing Director of Health Services Australia Ltd, certifying that the person has lost the use of one or more limbs and is unable to use public transport.
The person is not undertaking paid work or working in their own business. However, the person is looking for paid work and also undertakes volunteer work on a regular basis for which no monetary payment is received.
The entity, the car dealer, is registered for goods and services tax (GST). The supply of the car satisfies all of the other positive limbs of section 9-5 of the GST Act.
Reasons for Decision
Section 38-510 of the GST Act sets out the requirements that have to be met for a supply of a car to a person with disabilities to be GST-free.
Under subsection 38-510(1) of the GST Act a supply of a car to an individual is GST-free if:
- •
- the individual has a current disability certificate, issued by 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), that certifies that the person has lost the use of one or more limbs and is unable to use public transport; and
- •
- the individual intends to use the car in his or her personal transportation to or from gainful employment during all of the Subdivision 38-P period.
The nominated company, within the meaning of Part 2 of the Hearing Services and AGHS Reform Act, is Health Services Australia Ltd. The individual has a current disability certificate issued by the Managing Director of Health Services Australia Ltd which certifies that the person has lost the use of one or more limbs and is unable to use public transport.
Therefore, to establish whether the supply of the car is GST-free, it needs to be determined if the individual intends to use the car in his or her personal transportation to or from gainful employment during all of the Subdivision 38-P period.
The term 'gainful employment' is not defined in the GST Act. However, it is considered that a person is undertaking 'gainful employment' where the person is:
- •
- undertaking paid work, or working in his or her own business, for at least eight hours weekly on a regular basis; and
- •
- receiving a monetary reward which is commensurate to the person's age, experience and capabilities.
A person is not undertaking gainful employment where the person is looking for gainful employment or is undertaking volunteer work with no monetary remuneration being received.
The individual is not undertaking paid work or working in their own business. Rather the person is looking for paid work and performing volunteer work for which no monetary payment is received. Therefore, the person with disabilities is not undertaking gainful employment.
As the person with disabilities is not gainfully employed, they cannot intend to use the car in their personal transportation to or from gainful employment during all of the Subdivision 38-P period.
Therefore the supply of the car to the individual is not a GST-free supply under subsection 38-510(1) of the GST Act.
The entity is registered for GST and the supply of the car satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is not GST-free under any of the other provisions in Division 38 of the GST Act, nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it supplies a car to a person with disabilities who is not currently undertaking paid work.
Date of decision: 22 November 2002
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
Division 38
Subdivision 38-P
section 38-510
subsection 38-510(1)
Division 40
Part 2
Keywords
Goods & services tax
GST free
Cars for other disabled people
ISSN: 1445-2782
| Date: | Version: | |
| 22 November 2002 | Original statement | |
| You are here | 25 November 2005 | Archived |