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Edited version of your written advice
Authorisation Number: 1012699663866
Ruling
Subject: GST-free car for eligible veteran
Question
Are you entitled to purchase another car free of goods and services tax (GST) before the expiry of the two year period?
Decision
Yes, in your special circumstances, you are entitled to purchase another car GST-free before the expiry of the two year period.
Relevant facts and circumstances
• You are a veteran receiving a pension from the Department of Veterans Affairs.
• For many years you purchased a particular brand of four wheel drive cars with automatic transmission, as they were your choice of car and you were legally able to tow your caravan using them.
• In 20XX, you upgraded your caravan to another which was supposed to have a ball weight under M kg, which is suitable for your car. However, when you checked the ball weight of the caravan after a holiday, it was N kg, which was too much for your car.
• In order to comply with legal requirements, you had to change your car to another model of a four wheel drive car with manual transmission.
• As you were not accustomed to driving manual cars, after about 20,000 kms of driving your new car, the clutch was burnt out and you had to incur substantial expenses to replace it. You find that your new clutch is also wearing out fast.
• In order to prevent additional expenses, you want the approval of the Commissioner to dispose of your car and acquire a suitable car with automatic transmission. Your current car has done only Y kms and the two year period expires at the end of this month.
Relevant legislative provisions
A New tax System (Goods and Services Tax) Act 1999 (GST Act):
Subsection 38-505(1)
Subsection 195-1
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 forces or in any other armed force of Her Majesty and as a result of that service is a veteran to whom section 24 of the Veterans Entitlements Act 1986 applies and receives a pension under Part II of that Act and 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 in relation to the supply of a car to an individual means the period starting when he or she acquires it and ending at the earliest of the following times:
a) the end of 2 years after the acquisition;
b) the time when the car is no longer reasonably capable of being used for the purpose for which cars of that kind are ordinarily used;
c) a time that the Commissioner considers to be appropriate in special circumstances.
We consider that your situation qualifies as special circumstances.
Considering your special circumstances, we agree that you are eligible to purchase another car GST-free before expiry of the two year period since the purchase of your present car.