Edited version of private advice

Authorisation Number: 1052344712738

Date of advice: 19 December 2024

Ruling

Subject: Luxury car tax

Question

Is a car that exceeds the luxury car tax threshold, which is modified with hand controls, exempt from the meaning of a 'luxury car' under paragraph 25-1(2)(b) of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act)?

Answer

No.

This ruling applies for the following period:

1 July 20YY to 30 June 20YY

The scheme commenced on:

1 July 20YY

Relevant facts and circumstances

You are a person with a disability and use a wheelchair to transport yourself.

You intend to purchase a car that is over the LCT threshold.

You intend to purchase a car and install hand controls by a third party to allow you to drive that car with your hands.

You will not be seated in a wheelchair whilst being in the car.

Relevant legislative provisions

A New Tax System (Luxury Car Tax) Act 1999 Division 5

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

A New Tax System (Luxury Car Tax) Act 1999 section 5-20

Reasons for decision

Generally, luxury car tax (LCT) is payable when there is a taxable supply of a luxury car (Division 5 of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act)).

Subsection 25-1(1) of the LCT Act provides that a luxury car is a car, whose luxury car tax value exceeds the luxury car tax threshold.

For the 20YY-YY financial year the threshold for fuel efficient vehicles is $XX,XXX and $XX,XXX for other vehicles.

Paragraph 25-1(2)(b) of the LCT Act provides:

(2) However, a *car is not a *luxury car if it is:

(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).

The GST Act being A New Tax System (Goods and Services Tax) Act 1999.

The Commissioner's view and interpretation of paragraph 25-1(2)(b) of the LCT Act is the exemption from the definition of a 'luxury car' requires the vehicle to be modified to transport a person with a disability who is seated in their wheelchair.

Paragraph 25-1(2)(b) refers to the car and is not in relation to the severity of a person's disability. In order to satisfy paragraph 25-1(2)(b), a vehicle needs to be capable of transporting a person whilst seated in their wheelchair in the car, typically described as 'Wheelchair accessible vehicle's' (WAV's). WAV's are ordinarily modified so that:

•                     There is allocated floor space for the wheelchair.

•                     There is an unobstructed door allowing entry/exit of a wheelchair.

•                     Each allocated wheelchair position incorporates a wheelchair restraint system, and passenger restraint system (seatbelt).

•                     The vehicle is ordinarily required to be inspected and certified as a Wheelchair Accessible Vehicle (or similar) by the responsible state authority.

•                     Additional requirements may be imposed, such as compliance with Disability Standards for Accessible Public Transport, where for example the WAV is used as a taxi or other means of public transport.

On review of your circumstances, whilst you are a person who uses a wheelchair, there is no indication that the vehicle you intend to purchase is capable of allowing you to be transported whilst you are seated in your wheelchair.

In respect of the modifications, you intend to have hand controls fitted in. Though this will provide you with the assistance to drive the car without the use of your lower limbs, there is no indication of any other modifications that will enable the transportation of a person with a disability in a wheelchair. As such, the vehicle continues to be a luxury car on which LCT is payable.