Private ruling: GST and importing vehicles for disabled people under GST exemption
Date of advice: 6 March 2020
Published: April 2020
Ruling period: Not applicable
Date scheme commenced: Not applicable

Ruling: Q1: Will the importation of vehicles such as 'Welcab' be GST-free under section 38-510 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No.

Relevant facts and circumstances: The entity is a compliance and retail car yard that comply vehicles under the Department of Transports Regulations. The entity is registered for goods and services tax. The entity imports vehicles such as 'Welcab' and supplies to disabled customers. The entity imports the vehicles in their name and sells them to people with disability. They have also imported vehicles on behalf of their customers. The vehicles imported by the entity in the past were taxable importation. The entity believes that the vehicles imported by them and supplied to disabled customers should be GST-free under the GST exemption code of PODP.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 - section 13-10 | A New Tax System (Goods and Services Tax) Act 1999 - section 38-505 | A New Tax System (Goods and Services Tax) Act 1999 - section 38-510

Reasons for decision: Summary: Section 13-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that an importation is a non-taxable importation if it would have been a supply that was GST-free or input taxed if it had been a supply. Supplies of cars to disabled veterans and other disabled people are GST-free in certain circumstances. For the purposes of the exemption, a car is a 'motor vehicle' - i.e. a motor-powered road vehicle - designed to carry a load of less than one tonne and fewer than nine passengers. | Detailed Reasoning - Disabled veterans (Section 38-505 of the GST Act): Section 38-505 of the GST Act explains that a supply to an individual who is a disabled veteran is GST-free if the veteran intends to use the car for personal transportation during the whole of a specified period. This period is normally the first two years after acquisition of the car. The disabled veteran must be a person who has served in the Defence Force or in any other armed force of the Crown, and who as a result has lost a leg or both arms, or had a leg or both arms made permanently and completely useless. Veterans receiving a total disability pension (known as the totally and permanently incapacitated (TPI) pension) also qualify. The exemption also applies to veterans who receive, or are eligible to receive, a Special Rate Disability Pension under the Military Rehabilitation and Compensation Act 2004. | Detailed Reasoning - Other disabled people (section 38-510 of the GST Act): The supply of a car to any other disabled person is GST-free if the person has a current disability certificate to the effect that he or she cannot use public transport because of the loss of the use of one or more limbs. This means that if the modified car (Welcab) is imported on behalf of a disabled veteran or an eligible disabled person who is able to satisfy the circumstances described in sections 38-505 or 38-510 then the importation will not attract GST. However, the importation of a car by a business does not qualify as a GST-free importation if the business imports a car on their own behalf for subsequent sale to an individual. Under such circumstances the business would have to pay GST on importation and would be entitled to input tax credits if the car was acquired in the carrying on of their business. The importation of vehicles such as Welcab by the entity will be taxable importation. However, the subsequent sale to an eligible veteran or other disabled people with a current disability certificate would then be GST-free.