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Ruling
Subject: LCT and refurbished vehicles
Questions
• Is Luxury Car Tax (LCT) payable on a high value vehicle when it is given to you by your client for renovation and refurbishment work to be undertaken in Australia?
• Is LCT payable when you return the vehicle back to your client after the vehicle has been renovated and refurbished in Australia?
• If LCT is payable, on what value will the LCT be calculated on?
Decision
• No, LCT is not payable on a high value vehicle when it is given to you by your client for renovation and refurbishment work to be undertaken in Australia.
• No, LCT is not payable when you return the vehicle back to your client after the vehicle has been renovated and refurbished in Australia.
• Not applicable.
Relevant facts and circumstances
• You intend to supply a coordinated service to your clients as mentioned below:
(a) receive a client's vehicle and assess repairs, restoration, refurbishment and upgrade requirements;
(b) discuss with the client their requirements;
(c) quote for agreed services;
(d) disassemble the vehicle as required to do what the client has requested;
(e) arrange restoration/ refurbishment of parts as required by the client;
(f) arrange the supply of new replacement parts as required by the client;
(g) reassemble the vehicle and paint the body as required;
(h) return the vehicle to the client with the cost of parts and labour including goods and services tax (GST) invoiced.
• The vehicles concerned are Australian registered 19XX to 19YY high value vehicles.
• Your client retains ownership of the vehicle and holds the registration at all times during the refurbishment process.
Relevant legislative provisions
A New Tax System (Luxury Car Tax Act 1999) (LCT Act):
Section 5-5
Section 5-10
Reasons for the decision
Section 5-5 of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act) provides that you must pay luxury car tax on any taxable supply of a luxury car that you make.
Subsection 5-10(1) of the LCT Act provides:
You make a taxable supply of a luxury car if:
(a) you supply a *luxury car; and
(b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and
(c) the supply is *connected with Australia; and
(d) you are *registered, or *required to be registered.
(terms marked with asterisks (*) are defined in section 27-1 of the LCT Act).
As your client retains the ownership and registration of the vehicle during the refurbishment process, your client does not supply the vehicle to you or to any other entity. Therefore, paragraph 5-10(1)(a) of the LCT Act will not be satisfied. Therefore, during this process, your client will not make a taxable supply of a luxury car and will not incur any LCT liability.
The returning of the renovated and refurbished car back to your client does not come within paragraph 5-10(1)(a) of the LCT Act either. Therefore, the returning back of the car to your client after you undertake the necessary work is also not subject to LCT.