GST and supply of a car by way of lease to an individual who subsequently becomes an eligible disabled veteran

Does a taxable supply of a car by way of lease by the entity, a finance company, to an individual change to a GST-free supply under section 38-505 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when, during the lease period, the individual's status as an eligible disabled veteran begins?

No, the supply of the car by way of lease by the entity to an individual does not change from a taxable supply under section 9-5 of the GST Act to a GST-free supply under section 38-505 of the GST Act when during the lease period the individual's status as an eligible disabled veteran begins.

The entity's supply remains a taxable supply under section 9-5 of the GST Act.

The entity is a finance company that is registered for goods and services tax (GST). The entity supplied a car to an individual under a lease agreement. This supply was a taxable supply under section 9-5 of the GST Act. During the term of the lease the individual's status as an eligible disabled veteran begins (see paragraphs 38-505(1)(a) and (b) of the GST Act).

Under section 38-505 of the GST Act the supply of a car is GST-free if it is supplied to an individual who, having satisfied the requirements in subsection 38-505(1) of the GST Act, is an eligible disabled veteran. The requirements in subsection 38-505(1) of the GST Act must be satisfied when the supply is made to the individual for the supply to be GST-free.

After the entity supplies the car to the individual by entering the lease agreement the individual's status as an eligible disabled veteran begins. The individual was not an eligible disabled veteran when the supply is made. Because the relevant requirements of subsection 38-505(1) of the GST Act are not satisfied at the time that the supply of the car is made, the supply is not a GST-free supply to a disabled veteran under subsection 38-305(1).

Therefore, the entity's supply of the car lease remains a taxable supply under section 9-5 of the GST Act. Note. Section 156-22 of the GST Act treats a supply by way of lease as a supply that is made on a progressive or periodic basis for the purposes of Division 156 of the GST Act in attributing any GST payable on a taxable supply. The attribution does not change the status of the supply.