Private ruling: Luxury Car Tax and re-importation
Published: March 2013

Ruling: Q1: Is a vehicle which has been sent overseas, for a total restoration, subject to the Luxury Car Tax (LCT) when it is returned to Australia? | A1: Yes. A vehicle which has been sent overseas, for a total restoration, is subject to the LCT when it is returned to Australia.

Relevant facts and circumstances: You are not registered for GST You requested a private ruling on the following scenarios: Scenario 1: § You own a motor vehicle that you purchased in Australia a number of months ago § You send the vehicle overseas for a total restoration § You re-import the vehicle in Australia after restoration has taken place. § The re-importation of the vehicle will meet the LCT threshold Scenario 2: § You import an unrestored motor vehicle into Australia. § The cost of the unrestored vehicle being imported would fall under the LCT threshold § The motor vehicle will then be sent overseas for restoration § After total restoration, you then re-import the vehicle into Australia. § The re-importation of the vehicle will meet the LCT threshold In a request for further information, you provided the following response. § You confirmed that none of the following scenarios applied to your situation: · Previously imported goods that are returned after repair overseas under warranty provisions · Goods supplied free after a global safety recall · Goods, as prescribed by-law, imported for repair, alternation or industrial processing and which are to be exported · Personal bequeathed goods that are not to be sold or to be used for purposes of trade. In a subsequent telephone conversation, you provided the following information: § Under Scenario 1, LCT is not paid on the original purchase as it would fall under the LCT threshold.

Relevant legislative provisions: A New Tax System (Luxury Car Tax) Act 1999, section 7-5 | A New Tax System (Luxury Car Tax) Act 1999, section 7-10 | A New Tax System (Luxury Car Tax) Act 1999, section 7-20

Reasons for decision: Summary: A vehicle which has been sent overseas, for a total restoration, is subject to the LCT when it is returned to Australia. | Detailed Reasoning - Detailed reasoning: Section 7-5 of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act) states that you must pay the luxury car tax (LCT) payable on any taxable importation of a luxury car that you make. If you import a luxury car into Australia, the car will be subject to LCT if: · You do not quote your ABN and · You enter the car for home consumption You can make a taxable importation even if you are not registered for GST or carrying on an enterprise. An imported car includes any car parts, accessories or attachments you import at the same time that could reasonably be expected to be fitted to the car. If the luxury car was restored overseas using parts that were purchased and exported from Australia, you must pay LCT unless you are entitled to quote an ABN. According to subsection 7-10(3) of the LCT Act, you will not have to pay LCT on an importation of a luxury car if any of the following apply: (a) you quote your ABN for the importation of the car (b) LCT has already been paid on the car (for example, you export a luxury car from Australia, having already paid LCT on the vehicle, and it is later returned to Australia in an unaltered condition) (c) the car is covered by certain items in schedule 4 to the Customs Tariff (d) the importation of the car is a non-taxable re-importation. | Detailed Reasoning - Quoting your ABN: You can quote your ABN to defer paying LCT when you purchase or import a luxury car if all of the following apply: § You are registered for GST § You have an ABN § You intend to use the car for one of the following purposes only: - holding the car for trading stock, other than holding it for hire or lease - carrying out research and development for the manufacturer of the car - exporting the car where the export is GST-free under GST law. From the facts provided, you are not registered for GST. Therefore paragraph 7-10(3)(a) of the LCT Act is not satisfied. | Detailed Reasoning - LCT has already been paid: Under paragraph 7-10(3)(b) of the LCT Act, you do not make a taxable importation of a luxury car if LCT has already been payable in respect of the car. From the facts provided, LCT has not been paid on the original purchase or original importation of the motor vehicle in either scenario 1 or scenario 2. Therefore paragraph 7-10(3)(b) of the LCT Act is not satisfied. | Detailed Reasoning - Schedule 4 to the Customs Tariff: Under schedule 4 to the Customs Tariff, a motor vehicle is not subject to LCT at the time it is imported if it is covered by the following items. Item number: Deals with: 18A Previously imported goods that are returned after repair overseas under warranty provisions 18B Goods supplied free of charge to replace goods or parts under warranty 18C Goods supplied free after a global safety recall 21 Goods, as prescribed by by-law, imported for repair, alteration or industrial processing and which are to be exported 24 Personal bequeathed goods that are not to be sold or to be used for purposes of trade From the facts provided, you have confirmed that none of the above items applied to your situation. Therefore paragraph 7-10(3)(c) of the LCT Act is not satisfied. | Detailed Reasoning - Non-taxable re-importation: Under paragraph 7-10(3)(d) of the LCT Act, you do not make a taxable importation of a luxury car if the importation of the car is a non-taxable re-importation. Under subsection 7-20(1) of the LCT Act, an importation is a non-taxable re-importation if each of the following applies: (a) the car previously exported and is now being returned to Australia in an unaltered condition (b) the importer either (i) manufactured the vehicle (ii) previously purchased or imported the car and LCT was paid at that time (iii) previously imported the car and LCT was paid at that time From the facts provided, and in both scenarios, the motor vehicle has been sent overseas for a total restoration. The motor vehicle will not be returned to Australia in an unaltered condition. Therefore paragraph 7-10(3)(d) of the LCT act is not satisfied. It is considered that in both scenarios, a vehicle which has been sent overseas, for a total restoration, will be subject to the LCT when it is returned to Australia.