Issue
Is the entity, a motor car dealer, 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 hearse?
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 hearse. The hearse is a commercial vehicle that is not designed for the principal purpose of carrying passengers.
Facts
The entity is a motor car dealer. The entity sells a hearse to a funeral director. The hearse is used for transporting deceased persons to a place of burial.
The selling price of the hearse exceeds the luxury car tax threshold.
The entity is registered for goods and services tax (GST).
Reasons for Decision
To make a taxable supply of a luxury car under subsection 5-10(1) of the LCT Act, one of the requirements that must be satisfied is that the car must be a 'luxury car' as defined in section 25-1 of the LCT Act (paragraph 5-10(1)(a)of the LCT Act).
Subsection 25-1(1) of the LCT Act provides that a 'luxury car' is a car whose luxury car tax value exceeds the luxury car tax threshold. The selling price of the hearse exceeds the luxury car tax threshold.
However, paragraph 25-1(2)(c) of the LCT Act provides that a car is not a luxury car if it is a commercial vehicle that is not designed for the principal purpose of carrying passengers.
The term 'commercial vehicle' is not defined in the LCT Act. The Macquarie Dictionary , 1997, 3rd edn, The Macquarie Library Pty Ltd, NSW defines the term 'commercial vehicle' as a vehicle able to carry goods or passengers, and designed for use by business, as a panel van, utility truck, etc.
A hearse is a vehicle that is used for conveying a deceased person to a place of burial as part of the undertaker's business and therefore, falls within the definition of the term 'commercial vehicle'. In addition, a hearse is not designed for the principle purpose of carrying passengers. As the supply of the hearse satisfies the exclusion contained in paragraph 25-1(2)(c) of the LCT Act, it does not fall within the definition of a 'luxury car'.
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 hearse. The sale of a hearse is not subject to luxury car tax.