Preamble
No. The luxury car tax value for a car acquired under a hire purchase agreement under subsection 5-20(1) of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act) is the price of the car subject to certain exclusions. The luxury car tax value does not include the consideration provided for the supply of credit under the hire purchase agreement.
Andrea is registered for GST. On 30 September 2012, Andrea enters into a hire purchase agreement with Hocum Car Finance, a finance company, to purchase a car. The GST inclusive price of the car is $55,000 (excluding any Australian tax, fee or charge) and the scheduled credit charges over the term of the hire purchase agreement total $6,600 (including GST of $600).
The hire purchase agreement involves the supply of the luxury car and the supply of credit. The luxury car tax value of the car is $55,000. The consideration Andrea provides for the supply of credit is not included in the luxury car tax value.
This Determination applies both before and after its date of issue. However, this Determination will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Determination (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10).
Appendix 1 - Explanation
Subsection 5-20(1) of the LCT Act provides that in relation to the supply of a car, the luxury car tax value is the price of the car excluding: (a) any luxury car tax for that supply; and (b) any other Australian tax or Australian fee or charge, other than GST and customs duty; payable on the supply.
In applying subsection 5-20(1) of the LCT Act, it is necessary to determine the price of the car. Section 27-1 of the LCT Act provides that the term 'price', in relation to a supply, has the meaning given by section 9-75 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). Pursuant to subsection 9-75(1) of the GST Act, the price of the car includes the amount of any monetary consideration (including GST) and the GST inclusive market value of any non-monetary consideration provided for the supply of the car. Section 27-1 of the LCT Act also provides that the term 'consideration' has the meaning given by section 195-1 of the GST Act.
The GST law recognises that a hire purchase agreement involves both the supply of goods and the supply of credit. Both the GST Act and the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) provide textual support for recognising the supply of goods and the supply of credit made under a hire purchase agreement. Section 156-23 of the GST Act makes reference to a supply or acquisition of goods or credit under a hire purchase agreement. [1] The GST Regulations make specific reference to credit under a hire purchase agreement in item 8 in the table in subregulation 40-5.09(3) [2] and item 20 in the table in regulation 40-5.12. [3]
This view is consistent with the following statements made in the Explanatory Statement to the A New Tax System (Goods and Services Tax) Amendment Regulation 2012 (No. 1) concerning the application of item 20 in the table in regulation 40-5.12 of the GST Regulations which specifies that a supply of credit under a hire purchase agreement entered into on or after 1 July 2012 is not a financial supply: • The amendments are not intended to affect the calculation of luxury car tax. In working out whether a car is a luxury car with respect to exceeding the luxury car tax threshold, only the price of the car is taken into account. The price includes GST and customs duty and does not include any luxury car tax, or any other Australian tax, fee or charge. The GST-inclusive price of the supply of credit is not relevant to the calculation. • The supply of the car and the supply of the credit continue to be treated as two separate supplies.
The consideration provided for the supply of credit therefore does not affect the price of the car in determining the luxury car tax value for the car.
The consideration provided for the supply of credit and the consideration provided for the supply of the car will be identified pursuant to the terms of the hire purchase agreement.