Luxury car tax and importation of a sports car

Is the entity, a motor vehicle importer, importing a 'luxury car' as defined in section 25-1 of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act), when it imports a sports car that is designed for road use but cannot be registered in Australia?

Yes, the entity is importing a luxury car as defined in section 25-1 of the LCT Act when it imports a sports car that is designed for road use but cannot be registered in Australia.

The entity is a motor vehicle importer. The entity is registered for goods and services tax (GST).

The entity imports a sports car that is designed for road use but utilises advanced concepts in racing technology. The sports car has specifications and features that are designed for both road and race conditions. It is designed to carry a load of less than two tonnes and fewer than nine passengers.

The car cannot be registered in Australia. The car can only be used for exhibition purposes and not for use on public roads in Australia. The sports car can be shown at club events, track days, motor shows and private displays and can only be driven on private roads and on circuits.

The luxury car tax value of the sports car exceeds the luxury car tax threshold.

The sports car is not a prescribed emergency vehicle, a commercial vehicle, a motor home or a campervan.

Subsection 25-1(1) of the LCT Act defines a 'luxury car' as a 'car whose value exceeds the luxury car tax threshold'.

'Car' is defined in section 27-1 of the LCT Act as a: motor vehicle (except a motor cycle or similar vehicle) that is designed to carry a load of less than 2 tonnes and fewer than 9 passengers or a limousine (regardless of the number of passengers it is designed to carry).

'Motor vehicle' is also defined in section 27-1 of the LCT Act to be 'a motor powered road vehicle (including a 4 wheel drive vehicle)'. The term 'road vehicle' is not defined in the LCT Act.

Neither The Macquarie Dictionary, 1997, 3rd edn, The Macquarie Library Pty Ltd, New South Wales nor The Australian Concise Oxford Dictionary, 1997, 3rd edn, Oxford University Press, South Melbourne define the term 'road vehicle'.

Guidance on the meaning of the term 'road vehicle' can be found in the Motor Vehicle Standards Act 1989 (the object of which is to achieve uniform vehicle standards to apply to road vehicles used for transport in Australia).

Section 5 of the Motor Vehicle Standards Act defines a 'road vehicle' to mean a road motor vehicle, a road trailer or a partly completed road vehicle. Section 5 of the Motor Vehicle Standards Act further defines the term 'road motor vehicle' as: • a motor vehicle designed solely or principally for the transport on public roads of people, animals or goods, or • a motor vehicle that is permitted to be used on public roads.

Additionally, in Sales Tax Ruling SST 13, the Commissioner considered the meaning of 'road vehicle' for the purposes of the sales tax legislation. Paragraph 3.2 of SST 13 states: The term 'road vehicle' refers to the class of vehicle, not to the actual use to which a particular vehicle may be put. It is a road vehicle if it is in a class of vehicle that is designed for use on public roads and it would be a road vehicle even thought it may never be used or registered for use on public roads.

Having considered these definitions, for the purposes of the LCT Act, a road vehicle is a vehicle that is designed for use on public roads. The term 'public roads' is not restricted to public roads in Australia. It includes public roads in any country in the world.

The sports car is designed for road use but utilises advanced concepts in racing technology. The sports car has specifications and features that are designed for both road and race conditions.

Although, the entity's sports car cannot be registered in Australia and can only be driven on private roads and on circuits, the sports car is of a class of vehicle that is designed for road use and is a road vehicle. The sports car is motor powered and falls within the definition of 'motor vehicle'. As it is designed to carry a load of less than two tonnes and fewer than nine passengers, the entity's sports car falls with the definition of 'car' under section 27-1 of the LCT Act.

As the luxury car tax value of the sports car exceeds the luxury car tax threshold it is a 'luxury car' under subsection 25-1(1) of the LCT Act.

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 A New Tax System (Goods and Services Tax) Act 1999 (GST Act), • a commercial vehicle, or • a motor home or campervan.

The sports 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.

Therefore, the entity is importing a car that is a luxury car as defined in section 25-1 of the LCT Act when it imports a sports car that is designed for road use but cannot be registered in Australia.

Note: The entity will be making a taxable importation of a luxury car if the requirements in section 7-10 of the LCT Act are satisfied.