Private ruling: LCT and refurbished vehicles
Published: October 2014

Ruling: Q1: • Is Luxury Car Tax (LCT) payable on a high value vehicle when it is given to you by your client for renovation and refurbishment work to be undertaken in Australia? • Is LCT payable when you return the vehicle back to your client after the vehicle has been renovated and refurbished in Australia? • If LCT is payable, on what value will the LCT be calculated on? Decision • No, LCT is not payable on a high value vehicle when it is given to you by your client for renovation and refurbishment work to be undertaken in Australia. • No, LCT is not payable when you return the vehicle back to your client after the vehicle has been renovated and refurbished in Australia. • Not applicable.

Relevant facts and circumstances: • You intend to supply a coordinated service to your clients as mentioned below: (a) receive a client's vehicle and assess repairs, restoration, refurbishment and upgrade requirements; (b) discuss with the client their requirements; (c) quote for agreed services; (d) disassemble the vehicle as required to do what the client has requested; (e) arrange restoration/ refurbishment of parts as required by the client; (f) arrange the supply of new replacement parts as required by the client; (g) reassemble the vehicle and paint the body as required; (h) return the vehicle to the client with the cost of parts and labour including goods and services tax (GST) invoiced. • The vehicles concerned are Australian registered 19XX to 19YY high value vehicles. • Your client retains ownership of the vehicle and holds the registration at all times during the refurbishment process.

Relevant legislative provisions: A New Tax System (Luxury Car Tax Act 1999) (LCT Act): Section 5-5 | Section 5-10 | Reasons for the decision | Section 5-5 of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act) provides that you must pay luxury car tax on any taxable supply of a luxury car that you make. | Subsection 5-10(1) of the LCT Act provides: | You make a taxable supply of a luxury car if: | (a) you supply a *luxury car; and | (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and | (c) the supply is *connected with Australia; and | (d) you are *registered, or *required to be registered. | (terms marked with asterisks (*) are defined in section 27-1 of the LCT Act). | As your client retains the ownership and registration of the vehicle during the refurbishment process, your client does not supply the vehicle to you or to any other entity. Therefore, paragraph 5-10(1)(a) of the LCT Act will not be satisfied. Therefore, during this process, your client will not make a taxable supply of a luxury car and will not incur any LCT liability. | The returning of the renovated and refurbished car back to your client does not come within paragraph 5-10(1)(a) of the LCT Act either. Therefore, the returning back of the car to your client after you undertake the necessary work is also not subject to LCT.