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Ruling

Subject: Refund of GST to a totally and permanently incapacitated (TPI) veteran

Question

Can you claim a refund of the goods and services tax (GST) paid on the purchase of your motor vehicle (vehicle or car) from the Australian Taxation Office (ATO)?

Decision

No, you cannot claim a refund of the GST paid on the purchase of your vehicle from the ATO. We suggest that you should contact the supplier of the vehicle, provide them with the necessary documentation and seek an adjustment to the price.

Relevant facts and circumstances

You have submitted to the ATO a duly completed 'Declaration to the Commissioner of Taxation - Exemption of GST for Vehicle or Vehicle Parts - Disabled Veterans' (declaration).

On the declaration, you have declared that you are a totally and permanently incapacitated (TPI) veteran, to whom section 24 of the Veterans' Entitlements Act 1986 applies and you receive a pension under Part II of that Act.

You recently purchased a vehicle from a local motor dealer for personal transportation. The GST inclusive purchase price of the vehicle was $X.

You have declared that you intend to use the vehicle described in section B of the declaration for your personal transportation for a period of two years or until the car has travelled 40,000 kms from the date of purchase.

On the declaration, you have requested that the vehicle be supplied to you GST-free under section 38-505 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

You were unsure of the procedures for claiming the GST exemption for this vehicle and failed to submit the necessary documentation to the dealer. Consequently, you paid the GST inclusive price for the vehicle. Now you wish to obtain a refund or a credit for the GST paid on the vehicle from the ATO.

As per our records, you are not carrying on an enterprise and not registered for GST. You do not lodge Business Activity Statements (BAS) with the ATO.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 (GST Act) - section 38-505

Reasons for the decision

Subsection 38-505(1) of the GST Act provides that a supply is GST-free if it is a supply of a car to an individual who:

has served in the Defence Force or in any other armed force of Her Majesty; and

as a result of that service:

…; or

…; or

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

….intends to use the car in his or her personal transportation during all of the Subdivision 38-P period.

Section 195-1 of the GST Act provides that Subdivision 38-P period means the period starting when the person acquires the car and ending at the earliest of the following times:

· end of two years after the acquisition;

· the time when the car is no longer reasonably capable of being used for the purpose for which cars of this kind are ordinarily used;

· a time that the Commissioner considers to be appropriate in special circumstances.

We accept that under subsection 38-505(1) of the GST Act, you satisfy the requirements to acquire a motor vehicle GST-free.

However, due to a lack of understanding of the relevant procedures, you have paid a GST inclusive price to the motor dealer. Now you wish to obtain a refund or a credit for the GST paid on the vehicle from the ATO.

GST credit

A credit for the GST included in the price of any acquisition can only be obtained from the ATO through the lodgement of a BAS with the ATO. The acquisition should be related to the carrying on of your enterprise. A BAS can only be lodged by an entity that is carrying on an enterprise and registered for GST.

As mentioned above, you are not registered for GST and do not lodge BAS with the ATO. In addition, the acquisition of your vehicle was not related to any enterprise carried on by you. Therefore, we are not able to provide you a credit for, or a refund of, the GST paid by you on the purchase of your motor vehicle.

We suggest that you should contact the supplier of the vehicle, provide them with the completed declaration and seek an adjustment to the price paid. Should the supplier have any questions regarding your circumstances and the GST implications on them, the supplier could contact the ATO on 13 28 66.