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This edited version has been archived due to the length of time since original publication.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: 1012768870400

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    You cannot rely on this edited version in your tax affairs. You can only rely on the advice that we have given to you or to someone acting on your behalf.

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    Ruling

    Subject: Luxury car tax concessions

    Question 1

    Are you exempt from paying Luxury Car Tax (LCT) on your motor vehicle?

    Answer

    No.

    Relevant facts and circumstances

• You are registered for GST.

• You conduct a number of different fund-raising activities each year.

    • You will be auctioning a car via a bidding process to the highest bidder.

    • The expected sale of the car will be in excess of $90,000

    • Once purchased the recipient will be entitled to register the car and drive it on public roads within Australia.

    • You have provided specifications of the car that show that the car is roadworthy and allowed to be driven on public roads.

    • The car is less than two years old and has been manufactured in Australia.

    • LCT has not been paid previously on the car.

    Relevant legislative provisions

    A New Tax System (Luxury Car Tax) Act 1999 Section 5-5.

    A New Tax System (Luxury Car Tax) Act 1999 Section 5-10.

    A New Tax System (Luxury Car Tax) Act 1999 Section 5-15.

    A New Tax System (Luxury Car Tax) Act 1999 Section 7-1.

    A New Tax System (Luxury Car Tax) Act 1999 Section 25-1.

    A New Tax System (Luxury Car Tax) Act 1999 Section 27-1.

    Reasons for decision

    Section 5-5 of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act) provides that you must pay the luxury car tax payable on any taxable supply of a luxury car that you make.

    You make a taxable supply of a luxury car if:

      (a) you supply a luxury car

      (b) the supply is made in the course or furtherance of an enterprise that you carry on

      (c) the supply is connected with Australia, and

      (d) you are registered, or required to be registered (for GST purposes).

    The meaning of a 'car' can be found in section 27-1 of the LCT Act, which 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 passengers; or

      (b) a limousine (regardless of the number of passengers it is designed to carry).

    A 'luxury car' is defined under section 25-1 of the LCT Act in terms of whether the value of the car exceeds the luxury car tax threshold. The 'luxury car tax threshold' is the car depreciation limit that applies under subdivision 42-B of the Income Tax Assessment Act 1997 (the "ITAA 1997") for the year in which the supply of the car occurred.

    If the value of the car exceeds the luxury car threshold ($61,884 in the 2014-2015 financial year), and is not specifically excluded from the definition, then it is a luxury car. If it does not, or if the car is specifically excluded from the definition, then it is not a luxury car and will not be subject to the LCT.

    The LCT legislation provides that a car is not a luxury car (and subsequently the sale of a car will not be subject to LCT) if either of the following criteria is satisfied:

    • the car was manufactured in Australia and is more than two years old

    • the car was imported and entered for 'home consumption' more than two years before the sale

    • the recipient quotes for the supply of a car (ie. when they quote their Australian Business Number (ABN), in the prescribed form, for a supply or importation of a luxury car)

    • the car is exported as a GST-free supply under GST law (Subdivision 38-E of the GST Act)

    • the car is a vehicle that is specified in the regulations to be an emergency vehicle, or that is in a class of vehicles that are specified in the regulations to be emergency vehicles

    • the car is not GST-free and is specially fitted out for transporting disabled veterans or certain people with a disability

    • the car is a motor home or campervan, or

      • the car is a commercial vehicle designed mainly for carrying goods and not passengers.

    The car which you describe does not fall within any of the exceptions listed above. The car is:

    • designed to carry a load of less than two tonnes

    • designed to carry less than nine passengers, and

    • is a motor vehicle (or a vehicle similar to a car)

    Consequently, it satisfies the definition of a car for LCT purposes. Furthermore, as it does not satisfy any of the exemption provisions, it will therefore be subject to LCT.


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