Private ruling: LCT and importation of a crew cab vehicle
Published: July 2012

Ruling: Q1: Under Section 7-5 of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act), is LCT payable on the importation of a particular Crew Cab Vehicle (vehicle)? Decision No, under section 7-5 of the LCT Act, LCT is not payable on the importation of this particular vehicle.

Relevant facts and circumstances: You supply freight forwarding services. One of your clients has imported a particular crew cab vehicle, which is awaiting clearance from the Customs. It is a second-hand vehicle with dual cabs designed to carry 5 passengers including the driver. It is designed to carry goods and passengers. Its gross vehicle mass (GVM) is 4,536 kgs and unladen mass (UM) is 2,694 kgs. Its imported value including freight, insurance and other duties exceeds the LCT threshold. The Customs officers maintain that the vehicle is subject to LCT. However, you are aware of the fact that so many other entities have imported similar vehicles without paying LCT.

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 25-1 | A New Tax System (Luxury Car Tax) Act 1999 , Section 27-1 Reasons for the decision | Section 7-5 of the LCT Act provides that you must pay the luxury car tax payable on any taxable importation of a luxury car that you make. | Section 7-10 of the LCT Act provides that you make a taxable importation of a luxury car if: | · the luxury car is imported; and | · you enter the car for home consumption. | Note: There is no registration requirement for taxable importations and the importer need not be carrying on an enterprise. | Goods and Services Tax Ruling GSTR 2003/15 (GSTR 2003/15) refers to importation of goods into Australia. Paragraph 95 of GSTR 2003/15 states: | 95. The second requirement for a taxable importation is that goods are entered for home consumption. This is achieved by the lodgement of an entry of imported goods for home consumption with Customs. An entry for home consumption is the specified format in which Customs requires information to be provided in respect of imported goods. When it is processed and approved, the entry for home consumption allows the goods to be removed from Customs control. Imported goods can be entered for home consumption, entered for warehousing or entered for transhipment, within the meaning of the Customs Act. Only entries for home consumption are relevant for the purposes of section 13-5. | When you lodge the relevant forms with the Customs on behalf of your client and they are approved, you will enter the vehicle for home consumption. | Dual purpose vehicles | Section 27-1 of the LCT Act provides that a car means a motor vehicle (except a motor cycle or similar vehicle) that is designed to carry a load of less than 2 tonnes and fewer that 9 passengers or a limousine (regardless of the number of passengers it is designed to carry). | As this imported vehicle is designed to carry less than 2 tonnes and fewer than 9 passengers, it meets the definition of a car. | 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. Accordingly, an entity does not have to pay LCT on a car with a value above the LCT threshold, if it is a commercial vehicle that is not designed for the principal purpose of carrying passengers. | Some vehicles with a load carrying capacity of less than two tonnes can be designed to carry both passengers and goods. These vehicles include dual cab vehicles, crew cab vehicles and utility vehicles. | These vehicles will be referred to as dual purpose vehicles. The principal purpose of such a vehicle depends on the load carrying capacity and whether it is designed to carry mainly passengers or goods. | In order to determine the principal purpose of this vehicle, it is necessary to refer to the Australian Design Rules. The Australian Design Rules Definitions and Vehicle Categories state that: A vehicle constructed for both the carriage of persons and goods shall be considered to be primarily for the carriage of goods, if the number of seating positions times 68 kgs is less than 50% of the difference between the Gross Vehicle Mass and the Unladen Mass. | The vehicle can carry 5 passengers including the driver. Therefore, the total passenger weight is equal to 68 x 5 = 340 kgs. | As per the above calculations, the total passenger weight is less than 50% of the load carrying capacity. Therefore, this particular vehicle does not satisfy the Australian Design Rules as a car. Accordingly, LCT is not applicable to the importation of this vehicle.


Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.