Issue
Is the entity, a supplier of car parts, making a GST-free supply under subsection 38-510(4) of the A New Tax System (Goods & Services Tax) Act 1999 (GST Act), when it sells a car part to a person with disabilities for a car that is designed to carry a load of one tonne or more?
Decision
No, the entity is not making a GST-free supply under subsection 38-510(4) of the GST Act when it sells a car part to a person with disabilities for a car that is designed to carry a load of one tonne or more. The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a supplier of car parts.
The entity is registered for GST. The supply satisfies the other positive limbs of section 9-5 of the GST Act.
The entity sells a car part to an individual who is a person with disabilities who meets the requirements of subsection 38-510(1) of the GST Act.
The car part is for a car that is designed to carry a load of more than one tonne.
Reasons for Decision
Under Subdivision 38-P of the GST Act, a supply of car parts to a person with disabilities may be GST-free. Subsection 38-510(4) of the GST Act sets out the requirements for a supply of a car part that is for a car for a person with disabilities to be GST-free.
Subsection 38-510(4) of the GST Act requires that the supply must be of car parts for a car for an individual to whom subsection 38-510(1) of the GST Act applies.
The term 'car' is defined in section 195-1 of the GST Act as having the meaning given by section 995-1 of the Income Tax Assessment Act 1997, which states that a car means 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.
In this case, the car part is for a motor vehicle that is designed to carry a load of one tonne or more. Therefore, the car part is for a car that does not meet the definition of a car in section 195-1 of the GST Act. As a result, the car part is not GST-free. Consequently, the entity is not making a GST-free supply under subsection 38-505(4) of the GST Act.
The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it sells a car part to a person with disabilities for a car that is designed to carry a load of one tonne or more.