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Edited version of private advice
Authorisation Number: 1012685073316
Ruling
Subject: GST credits on
Question
Are you entitled to claim GST credit on your vehicle?
Advice
Yes
Relevant facts and circumstances
You are registered for goods and services tax (GST).
You carry on an enterprise of providing services.
During the relevant year you purchased a vehicle for your business.
The vehicle is light commercial vehicle which could be used to carry passenger and goods.
You use the vehicle to carry your supplies and equipment
The cost of the vehicle (including GST) exceeded the car limit for the relevant financial year.
You hold a tax invoice for the purchase.
The supplier did not charge luxury car tax (LCT) on the vehicle.
You advised that the vehicle is used solely (100%) for business.
Reasons for decision
Under section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999
(GST Act) you are entitled to GST credit for any creditable acquisition that you make.
Section 11-5 of the GST Act provides you make a creditable acquisition if:
• you acquire anything solely or partly for a creditable purpose
• the supply of the thing to you is a taxable supply
• you provide, or are liable to provide, consideration for the supply and
• you are is registered or required to be registered for GST.
The meaning of creditable purpose is outlined in section 11-15(1) of the GST Act. You acquire a thing for a creditable purpose where the acquisition is for carrying on your enterprise. However, subsection 11-15(2) of the GST Act provides that the thing is not acquired for a creditable purpose to the extent that it is of a private or domestic nature or relates to making input taxed supplies.
You have purchased the vehicle for your business. You advised that the vehicle is used solely for business purposes (100% business use). The vehicle is not used for private and domestic use and you do not make any input taxed supplies. Therefore, you have acquired the vehicle for a creditable purpose.
You paid $ (including $ of GST) for the vehicle and you are registered for GST. Therefore, you have made a creditable acquisition under section 11-5 of the GST Act when you acquire the vehicle for your business. You are entitled to claim the GST credits on the vehicle.
However, subsection 69-10(1) of the GST Act limits the maximum GST credit claimable where the GST inclusive market value of the vehicle exceeds the car limit for the financial year. The car limit for 2013-14 is $60,316 and the maximum GST credit available is 1/11th of the car limit.
You purchased the vehicle for your business. The market value for the vehicle exceeds the car limit for the 2013-14 financial year. Therefore subsection 69-10(1) of the GST Act will apply unless it is excluded by subsection 69-10(4) of the GST Act.
Subsection 69-10(4) of the GST Act provides subsection 69-10(1) of the GST Act does not apply to a vehicle that is not a luxury car under subsection 25-1(2) of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act)
Subsection 25-1(2) of LCT Act
Paragraph 25-1(2)(c) of the LCT Act provides that a car is not a luxury car if it is a commercial vehicle that is not designed for the principal purposes of carrying passenger.
In addition, section 27-1 of LCT Act provides the meaning of car for LCT purposes. It states:
car means a motor vehicle(except a motor cycle or similar vehicle) that is
(a) designed to carry a load of less than 2 tonnes and fewer than 9 passenger, or…
Based on information provided, we consider the vehicle is not a luxury car for LCT purposes. The vehicle has been described on a dealer website as a purpose built off road, light commercial truck that has a towing capacity of up to 3.5 tonnes. The vehicle is designed to do the toughest jobs under the harshest conditions. Therefore, the vehicle is not a luxury car (paragraph 25-1(2)(c) of the LCT Act) and subsection 69-10(1) of the GST Act does not apply to your GST credits claim on your vehicle. The vehicle is a commercial vehicle which you use (100%) for your business.
Therefore, as the vehicle is a creditable acquisition to you and you currently hold a tax invoice, you may claim the GST credits in your next activity statement.