Issue
Is the entity, an importer of luxury cars, making a taxable supply of a luxury car under section 5-10 of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act), when it sells a luxury car to a car dealer who quotes their Australian business number (ABN) in the approved form?
Decision
No, the entity is not making a taxable supply of a luxury car under section 5-10 of the LCT Act, when it sells a luxury car to a car dealer who quotes their ABN in the approved form.
Facts
The entity is an importer of luxury cars.
The entity imports a luxury car. The car is a luxury car for the purposes of the LCT Act. The entity sells the car to a car dealer who quotes its ABN in the approved form for the purposes of the LCT Act. At the time of quoting its ABN, the car dealer intends to hold the car as trading stock.
The entity is registered for goods and services tax (GST).
Reasons for Decision
Under subsection 5-10(1) of the LCT Act, an entity makes a taxable supply of a luxury car if: • they supply a luxury car; and • the supply is made in the course or furtherance of an enterprise that they carry on; and • the supply is connected with Australia; and • they are registered, or required to be registered for GST.
However, under paragraph 5-10(2)(a) of the LCT Act, an entity does not make a taxable supply of a luxury car if the recipient quotes for the supply of the car.
Section 27-1 of the LCT Act defines that the term 'recipient', in relation to a supply, means the entity to which the supply was made. As the entity sells the car to a car dealer, the recipient of the supply is the car dealer.
'Quote' is defined in section 27-1 of the LCT Act as meaning to quote an ABN.
Section 9-5 of the LCT Act further provides that a recipient is entitled to quote its ABN in relation to the supply of a luxury car only in certain circumstances. A recipient is entitled to quote their ABN if, at the time of quoting, they had the intention of using the car for one of the following purposes: • holding the car as trading stock, other than holding it for hire or lease; or • research and development for the manufacturer of the car; or • exporting the car in circumstances where the export where the export is GST-free under Subdivision 38-E of the A New Tax System (Goods and Services Tax) Act 1999 .
At the time of purchase the recipient, the car dealer, intends to hold the car as trading stock and quotes its ABN in the approved form.
Therefore, the entity is not making a taxable supply of a luxury car under section 5-10 of the LCT Act, when it sells a luxury car to a car dealer who has quoted their ABN in the approved form.