Edited version of private ruling

Authorisation Number: 1011823817906

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Ruling

Subject: Luxury car tax

Question

Are you able to use the formula in the Australian Design Rules (ADR) to determine whether a vehicle is designed primarily for the carriage of goods or passengers for luxury car tax purposes from 1 July 2010?

Answer

No, you are not able to use the formula in the ADR to determine whether a vehicle is designed primarily for the carriage of goods or passengers from 1 July 2010. However, the current ATO view is presently being reviewed in an effort to align with the ADR. At such time the ATO has a change of view in regard to this issue; you will then be able to adopt that approach when determining the principal purpose of the vehicle.

Relevant facts and circumstances

· You are registered for LCT and report your LCT obligations on a monthly basis.

· You carry on an enterprise of the wholesale sale of vehicles including luxury cars.

· Your sales include vehicles designed for the dual purpose of the carriage of both passengers and goods.

· You contend that the ATO method for determining the categorisation of a vehicle's primary purpose (i.e. either the carriage of goods or passengers) is not consistent with the method contained in the ADR.

Reasons for decision

Section 5-5 of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act) states that you are liable for the luxury car tax payable on any taxable supply of a luxury car that you make.

A 'taxable supply of a luxury car' is defined in section 5-10 of the LCT Act and includes the requirement that you supply a luxury car.

The term 'car' is defined in the LCT Dictionary at section 27-1 of the LCT Act as a motor vehicle (except a motor cycle or similar vehicle) that is designed to carry a load of less than 2 tonnes and fewer than 9 passengers or a limousine (regardless of the number of passengers it is designed to carry).

The term 'luxury car' is defined in section 25-1 of the LCT Act. The definition excludes a 'car' that is a commercial vehicle that is not designed for the principal purpose of carrying passengers.

Some vehicles with a load carrying capacity of less than two tonnes can be designed to carry both passengers and goods. [i.e. A dual purpose]

These vehicles include:

· dual cab vehicles

· crew cab vehicles, and

· utility vehicles.

In order to determine whether a vehicle is designed for the principal purpose of the carriage of goods or passengers, the ATO provides guidance in the publication titled Luxury car tax (NAT 3394).

The ATO is currently in the process of reviewing the view expressed in NAT 3394 to align with the method adopted in the ADR. That is, a vehicle constructed for both the carriage of persons and the carriage of goods shall be considered to be primarily for the carriage of goods if the number of seating positions times 68 kg is less than 50% of the difference between the 'Gross vehicle mass' and the 'Unladen (Tare) mass'.

The anticipated date of effect of the change is 1 July 2011. As such, prior to the date of the change in the ATO view, it is the ATO position that whether a vehicle is designed for the principal purpose of carrying either passengers or goods is determined in accordance with the explanation in NAT 3394.