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Edited version of your written advice
Authorisation Number: 1012793934886
Ruling
Subject: GST and the purchase of a vehicle that is above the luxury car threshold
Questions
1. Is luxury car tax (LCT) payable on the supply of a vehicle which has a gross vehicle mass of 2,410kg, a tare mass of 1,830kg and the vehicle is able to carry two passengers?
2. Are you able to claim 100% input tax credits on the GST included in the purchase of the vehicle?
Answer
1. No, LCT is not payable on the supply of a vehicle which has a gross vehicle mass of 2,410kg a tare mass of 1,830kg and the vehicle is able to carry two passengers.
2. Yes, you able to claim 100% input tax credits on the GST included in the purchase of the vehicle provided you hold a valid tax invoice.
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You are registered for GST.
You plan to purchase a vehicle to carry on your enterprise.
The vehicle will not be used for making supplies that are input taxed.
The vehicle's gross vehicle mass is 2,410kg and the tare mass is 1,830kg.
The vehicle is able to carry two passengers.
The supply of the vehicle to you will be a taxable supply and you are liable to pay consideration for the vehicle in your capacity as the trustee of the trust.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 sections 11-5, 69-10 and
A New Tax System (Luxury Car Tax) Act 1999 sections 25-1, 25-5, 27-1.
Reasons for decision
Is the vehicle a luxury car?
A luxury car is defined in section 25-1 of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act) as follows:
1) A luxury car is a *car whose *luxury car tax value exceeds the *luxury car tax threshold.
2) However, a *car is not a *luxury car if it is:
(a) 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; or
(b) specially fitted out for transporting *disabled people seated in wheelchairs (unless the supply of the car is *GST-free under Subdivision 38-P of the *GST Act); or
(c) a commercial vehicle that is not designed for the principal purpose of carrying passengers; or
(d) a motor home or campervan.
(terms marked with asterisks (*) are defined in section 27-1 of the LCT Act)
The vehicle meets the requirement under subsection 25-1(1) of the LCT Act as it is a car whose LCT value exceeds the LCT threshold.
The issue here is determining whether the vehicle is not a luxury car under subsection 25-1(2) of the LCT Act. We are of the opinion that the vehicle is not a luxury car because it comes within paragraph 25-1(2)(c) of the LCT Act for the following reasons.
The Vehicle Standard (Australian Design Rule) - Definitions and Vehicle Categories defines a Goods Vehicle as follows:
A vehicle constructed for both the carriage of persons and the carriage of goods shall be considered to be primarily for the carriage of goods if the number of seating positions times 68kg is less than 50% of the difference between the Gross Vehicle Mass (GVM) and the Unladen Mass (which is the Tare mass).
The seat number of the vehicle in this case is two.
The GVM of the vehicle is 2410kg.
The Tare mass of the vehicle is 1830kg.
The application of the formula in the Australian Design Rules to the vehicle will be as follows:
2 * 68kg = 136 kg
The difference between the = 580 kg
GVM and Tare mass
50 % of 580kg is = 290kg
In this instance, because the passenger weight 136kg is less than 50% of the remaining goods capacity 290kg, the vehicle will be taken to have been constructed primarily for the carriage of goods. Therefore, the vehicle is considered as a commercial vehicle not designed for the principal purpose of carrying passengers.
As the vehicle is not a luxury car, LCT is not payable.
Input tax credits
You are entitled to claim input tax credits on creditable acquisitions that you make. Section 69-10 of the A New Tax system (Goods and Services Tax) Act 1999 (GST Act) limits the amount of input tax credits on creditable acquisitions of certain cars to 1/11 of the car limit. Currently the car limit is $57,466.
However, pursuant to subsection 69-10(4) of the GST Act, these exclusions under section 69-10 of the GST Act do not apply to the acquisition of a car that is not a luxury car because of subsection 25-1(2) of the LCT Act. As the vehicle in this case is not a luxury car as per subsection 25-1(2) of the LCT Act, the exclusions under section 69-10 of the GST Act do not apply.
Accordingly input tax credits on your acquisition of the vehicle are not limited to 1/11 of the car limit. This means that, if you made a creditable acquisition, provided you have a tax invoice, you are entitled to claim the full amount paid as GST on your acquisition as input tax credits.
An entity makes a creditable acquisition where the requirements of section 11-5 of the GST Act are satisfied.
Section 11-5 of the GST Act states:
You make a creditable acquisition if:
(a) you acquire anything solely or partly for a *creditable purpose; and
(b) the supply of the thing to you is a *taxable supply; and
(c) you provide, or are liable to provide, *consideration for the supply; and
(d) you are *registered, or *required to be registered.
Therefore, an acquisition will be a creditable acquisition if all the conditions under section 11-5 of the GST Act are satisfied.