Issue
Is the entity, a car dealer, making a taxable supply of a luxury car under subsection 5-10(1) of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act), when it makes a GST-free supply of a car to an eligible disabled person, when: • the value of the car exceeds the luxury car tax threshold, and • the car is specifically fitted out for transporting disabled people seated in wheelchairs?
Decision
Yes, the entity is making a taxable supply of a luxury car under subsection 5-10(1) of the LCT Act, when it makes a GST-free supply of a car to an eligible disabled person, when the value of the car exceeds the luxury car tax threshold and the car is specifically fitted out for transporting disabled people seated in wheelchairs.
Facts
The entity is a car dealer. The entity is supplying a car GST-free to an eligible disabled person, under Subdivision 38-P of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
The luxury car tax value of the car (excluding modifications) is in excess of the luxury car tax threshold. The car is specifically fitted out for transporting disabled people seated in wheelchairs.
The entity is registered for goods and services tax (GST) and the supply is connected with Australia.
The car is not a car covered by subsection 5(1) of the A New Tax System (Wine Equalisation Tax and Luxury Car Tax Transition) Act 1999 (WET and LCT Transition Act). The car is not a prescribed emergency vehicle, a commercial vehicle, a motor home or a campervan.
The car is not excluded from being a taxable supply of a luxury car under subsection 5-10(2) of the LCT Act.
Reasons for Decision
Under subsection 5-10(1) of the LCT Act, an entity makes a taxable supply of a luxury car if: • it makes a supply of a luxury car • the supply is made in the course or furtherance of an enterprise that it carries on • the supply is connected with Australia, and • the entity is registered, or required to be registered for GST.
Under subsection 25-1(1) of the LCT Act, a luxury car is a car whose luxury car tax value exceeds the luxury car tax threshold. The entity is supplying a luxury car with a luxury car tax value (excluding the value of the modification) in excess of the luxury car tax threshold.
However, subsection 25-1(2) of the LCT Act, provides that a car is not a luxury car if it is: • a prescribed emergency vehicle • specifically 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) • a commercial vehicle, or • a motor home or campervan.
The car is not excluded from being a luxury car as it is not a prescribed emergency vehicle, a commercial vehicle, a motor home or a campervan.
Although the entity is supplying a car that is specifically fitted out for transporting disabled people seated in wheelchairs, the supply of the car is GST-free under Subdivision 38-P of the GST Act. As such, the car is not excluded from being a luxury car under subsection 25-1(2) of the LCT Act.
The entity supplies the car in the course of its car dealership enterprise, the supply is connected with Australia and the entity is registered for GST.
Accordingly, the entity is making a taxable supply of a luxury car under subsection 5-10(1) of the LCT Act, when it makes a GST-free supply of a car to an eligible disabled person where the value of the car (excluding the value of the modification) exceeds the luxury car tax threshold and the car is specifically fitted out for transporting disabled people seated in wheelchairs.
Note: Under subsection 5-20(5) of the LCT Act, the luxury car tax value of a car does not include the price of modifications made to the car solely for the purpose of adapting it for driving by a disabled person or adapting it for transporting a disabled person.