Edited version of private advice

Authorisation Number: 1052005783591

Date of advice: 12 July 2022

Ruling

Subject: Car limit

Question

Is a vehicle exempt from the car limit under section 40-230 of the ITAA 1997?

Answer

Yes

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You purchased a vehicle a dual cab utility and the specifications of the vehicle are Gross vehicle Mass (GVM) of 3,300kg and can carry 5 passengers (including the driver)

The vehicle guide provides that some vehicles with a load carrying capacity of less than two tonnes, such as dual cab vehicles, can be designed for the purpose of carrying both passengers and goods.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 40-230

Reasons for decision

Subsection 40-230(1) of the ITAA 1997 states that:

The first element of the cost of a car designed mainly for carrying passengers (after applying section 40- 225 and Subdivision 27-B) is reduced to the car limit for the financial year in which you started to hold it if its cost exceeds that limit.

'Car' is defined under section 995-1 of the ITAA 1997 as a motor vehicle (except a motor cycle or similar vehicle) designed to carry a load of less than 1 tonne and fewer than 9 passengers.

Based on the information provided, the vehicle is designed to carry a load of 760kg and can carry 5 passengers (including the driver).

The vehicle meets the definition of a car under section 995-1 of the ITAA 1997, as it is designed to carry a load of less than one tonne and carry fewer than nine passengers.

Draft Luxury Car Tax Determination LCTD 2022/D1 Luxury car tax: how to determine the principal purpose of a vehicle represents the Commissioner's preliminary view on how to determine the principal purpose of a car for the purposes of the A new Tax System (Luxury Car Tax) Act 1999.

Paragraphs 12 and 13 of LCTD 2022/D1 state:

12. The Commissioner accepts that the principal purpose of a dual or crew cab utility vehicle, with a load capacity of less than two tonnes, may be determined by applying the 'dual purpose test' in clause 4.5.2 of the Vehicle Standard (Australia Design Rule - Definitions and Vehicle Categories) 2005 (ADR) which sets out that:

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 percent of the difference between the 'Gross Vehicle Mass' and the 'Unladen Mass'.

13. For the purposes of the calculation referred to in paragraph 12 of this Determination:

•         the number of seating positions includes the driver's seat

•         the difference between the Gross Vehicle Mass (GVM) and the 'Unladen Mass' is the 'load carrying capacity of the vehicle'

•         load carrying capacity does not include towing capacity.

The vehicle has a principal purpose of carrying goods and it is not a car mainly designed for carrying passengers, therefore it will not be subject to the car limit under section 40-230 of the ITAA 1997.