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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your written advice

Authorisation Number: 1012701903639

Ruling

Subject: Cars for use by disabled people

Question

Can I, a disabled war veteran, buy a new car GST-free before the expiry of two years from the date of the previous purchase of a GST-free new car?

Answer

Yes.

This ruling applies for the following periods:

Not applicable

The scheme commences on:

Not applicable

Relevant facts and circumstances

    • You are a disabled war veteran.

    • You receive a pension under the Veterans' Entitlements Act 1986.

    • You purchased a new car GST-free within the last two years.

    • At the time of the purchase of that car, your intention was to use the car for two years.

    • However, you now find that you need a bigger car and would like to buy a new car to meet with your current circumstances.

    • The car you intend to purchase is not a luxury car as defined by the GST Act.

Relevant legislative provisions

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

Reasons for decision

Under subsection 38-505(1) of the A New tax System (Goods and Services Tax) Act 1999 (GST Act), a supply of a car is GST-free to an individual who:

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

      (b) as a result of that service:

          (i) …..or;

          (ii) …..or;

          (iii) 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

          (iv) …; and

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

(Terms marked with an asterisk are defined in section 195-1 of the GST Act)

Subdivision 38-P is defined in section 195-1 of the GST Act as follows:

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 acquisition;

      (b) the time when the car is no longer reasonably capable of being used for the purpose for which the cars of that kind are ordinarily used;

      (c) a time that the Commissioner considers to be appropriate in special circumstances.

In this case you purchased a new car GST-free within the last two years. You intended to use it for two years at the time you purchased it. However, due to your changed circumstances, you now wish to purchase another new car (before the expiry of two years).

The key requirement of the relevant legislation is that you must have an "intention" to use the car for two years at the time you purchase it. If your circumstances change, and consequently your intention changes within the two years, it would not bar you from purchasing another new car GST-free within that period.

Therefore, as long as the requirements of subsection 38-505(1) are satisfied, a supply of a new car to you is GST-free.

Please note that the GST-free provision is limited to the extent that the GST inclusive market value of the car does not exceed the luxury car threshold.


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