GST and the supply of a car to a person with a disability

Is the entity, a motor vehicle dealer, making a GST-free supply under section 38-510 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies a car to a person with a disability, who satisfies subsection 38-510(1) of the GST Act?

Yes, the entity is making a GST-free supply under section 38-510 of the GST Act when it supplies a car to a person with a disability, who satisfies subsection 38-510(1) of the GST Act.

The entity is a motor vehicle dealer. The entity is registered for goods and services tax (GST). The entity supplies a car to a person with a disability ('the individual'). The car is a 5 seater motor vehicle. The GST inclusive market value of the car does not exceed the car limit.

The individual has a current disability certificate issued by the Managing Director of the nominated company (within the meaning of Part 2 of the Hearing Services and AGHS Reform Act 1997 ), certifying that the person has lost the use of one or more limbs and is unable to use public transport. The individual intends to use the car for their personal transportation to and from gainful employment for at least two years.

Under subsection 38-510(1) of the GST Act, a supply of a car to an individual is GST-free where the individual: • has a current disability certificate issued by: • the person holding the position of Managing Director of the nominated company (within the meaning of Part 2 of the Hearing Services and AGHS Reform Act 1997 ); or • an officer or employee of that company who is authorised in writing by the Managing Director for the purposes of this section; • certifying that the individual has lost the use of one or more limbs to such an extent that he or she is unable to use public transport; and • intends to use the car in his or her personal transportation to or from gainful employment during all of the Subdivision 38-P period.

In this case, the individual has a current disability certificate, issued by the relevant authority, certifying that they have lost the use of one or more limbs to such an extent that they are unable to use public transport. The individual intends to use the car for their personal transportation to and from gainful employment.

The Subdivision 38-P period is defined in section 195-1 of the GST Act. It is the period starting when the person with the disability acquires the car and ending at the earliest of the following times: • the end of 2 years after the acquisition; or • the time when the car is no longer reasonably capable of being used for the purpose for which cars of that kind are ordinarily used; or • a time that the Commissioner considers to be appropriate in special circumstances.

As the individual intends to use the car for their personal transportation to and from gainful employment for a period of at least two years, the requirements of subsection 38-510(1) of the GST Act are satisfied.

As the GST-inclusive market value of the car does not exceed the car limit subsection 38-510(2) of the GST Act is not applicable.

Therefore, the entity is making a GST-free supply under section 38-510 of the GST Act when it supplies the car to a person with a disability. [NOTE: It does not matter if the individual purchasing the car subsequently sells the car prior to the end of the Subdivision 38-P period. It is the intention of the purchaser at the time of the supply that determines the GST status of the supply.]