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Edited version of your written advice
Authorisation Number: 1012814620405
Ruling
Subject: LCT and importation of a luxury vehicle
Question
Was the importation of the car a taxable importation for the purposes of the A New Tax System (Luxury Car Tax) Act 1999 and therefore subject to luxury car tax?
Answer
Yes, the importation of the car was a taxable importation for the purposes of the LCT Act and therefore subject to luxury car tax.
This ruling applies for the following periods:
Not applicable
The scheme commences on:
Not applicable
Relevant facts and circumstances
You recently imported a car and were charged an amount as luxury car tax.
The car which you imported still has the original registration plate.
The car was not finished when you imported it.
When you collected the car from the freight company, you started the engine only to find petrol pouring onto the ground from the fuel lines and the brake pedal went to the floor. Therefore, the car was delivered to your warehouse on a tilt truck.
You remade the fuel line and as the bolts holding the brake master cylinder to the chassis were put in the wrong way it had to be cut in half to be removed. As the brake was not working the original brake master cylinder had to be totally re-built.
The electric radiator fan will have to be removed and the blades reversed as the fan is running in reverse blowing forward instead of through the radiator.
A large amount of corrosion was noticed in the radiator which will need to be flushed as the engine overheats quite rapidly- not aided by the electric fan running the wrong way.
There was a problem with the steering wheel and the exhaust manifold was cracked right across the casting. You purchased a second hand manifold as replacement.
The steering wheel is X inches and the seat's position was too high making it impossible to fit under the badly cracked steering wheel. Therefore the seat had to be re-cut, remade, and repositioned. A new smaller steering wheel is now being fitted.
At the time of importation the vehicle could not be registered for being driven on Australian roads as there was still an extensive amount of work to be done before the vehicle could be operational and capable of receiving a compliance plate and a road worthy certificate
The car is still not ready for registration to be driven on a public road, as there is still work to be performed on it.
Relevant legislative provisions
A New Tax System (Luxury Car Tax) Act 1999 section 7-10
A New Tax System (Luxury Car Tax) Act 1999 subsection 25-1(1)
A New Tax System (Luxury Car Tax) Act 1999 section 27-1
Reasons for decision
Detailed reasoning
Under section 7-5 of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act), luxury car tax is payable on all taxable importations of luxury cars. Section 7-10(1) defines "taxable importation of a luxury car" in the following way:
"(1) You make a taxable importation of a luxury car if:
(a) the luxury car is imported; and
(b) you enter the car for home consumption."
The car was imported and it was entered for home consumption. The first issue in this case is whether the car meets the statutory definition of "luxury car".
That definition appears in subsection 25-1(1) of the LCT Act, which provides:
"A luxury car is a car whose luxury car tax value exceeds the luxury car tax threshold."
Currently the LCT threshold is $61,884 for non-fuel efficient cars. The LCT threshold for fuel efficient car is $75,375.
A car is a fuel efficient car if it has a fuel consumption not exceeding 7 litres per 100 kilometres.
The luxury car tax value of the car exceeds the luxury tax threshold. Accordingly, the car is a luxury car for purposes of the LCT Act, and subject to luxury car tax, if it meets the statutory definition of "car".
A 'car' is defined by section 27-1 of the LCT Act to be a "motor vehicle (except a motor cycle or similar vehicle) that is designed to carry a load of less than 2 tonnes and fewer than 9 passengers or a limousine (regardless of the number of passengers it is designed to carry)".
A 'motor vehicle' is also defined in section 27-1 of the LCT Act to be "a motor powered road vehicle (including a 4 wheel drive vehicle)".
What constitutes a 'road vehicle' is not further defined in the LCT Act.
In Sales Tax Ruling SST 13 the Commissioner has stated when a vehicle will be considered to be a General Purpose Road Vehicle (GPRV). In defining this term the Commissioner has also defined road vehicle. Paragraph 3.2 of SST 13 states:
The term 'road vehicle' refers to the class of vehicle, not to the actual use to which a particular vehicle may be put. It is a road vehicle if it is in a class of vehicle that is designed for use on public roads and it would be a road vehicle even though it may never be used or registered for use on public roads.
Therefore, to determine whether a vehicle is a "road vehicle" it must be determined whether it falls within a class of vehicles designed for use on a public road. To do this the meaning of a number of words must be considered. As the words "vehicle", "design" and "public roads" are not defined in the LCT Law, these words are given their ordinary meaning. This can be gained from the Macquarie Online Dictionary.
Public is defined as
"Open to the community as a whole"; or
"Maintained at the public expense, under public control and open to the public
generally."
Road is defined as:
"A way, usually open to the public for passage of vehicles, persons and animals"
A combination of the definitions of each of these separate terms produces a definition of "public road" as follows:
A public road is a way that is open to the community generally for the passage of vehicles, persons and animals.
The design of a vehicle is defined as
"The end in view, intention, purpose"
The Motor Vehicle Standards Act 1989 defines "road motor vehicle" and "road vehicle" as follows:
motor vehicle means a vehicle that uses, or is designed to use, volatile spirit, gas, oil, electricity or any other power (not being human or animal power) as the principal means of propulsion, but does not include a vehicle used on a railway or tramway.
road motor vehicle means:
(a) a motor vehicle designed solely or principally for the transport on public roads of people, animals or goods; or
(b) motor vehicle that is permitted to be used on public roads.
road vehicle means:
(a) a road motor vehicle; or
(b) a road trailer; or
(c) a partly completed road motor vehicle;..
Therefore, we are of the view that the car is of a class of vehicle that is designed for road use and will be considered a road vehicle.
As the car is a motor powered road vehicle it is considered to be a motor vehicle for LCT purposes. The car also meets the requirements outlined in the definition of "car" in section 27-1 of the LCT Act (i.e. designed to carry fewer than nine passengers and less than two tonnes) and as a result will also be considered to be a car for LCT purposes.
Consequently its importation is taxable.