Private ruling: Luxury car tax
Date of advice: 5 June 2025
Published: 4 August 2025
Date scheme commenced: 1 July 20XX

Ruling: Q1: Does the sale of the modified vehicle by the dealer, being a luxury car with modifications completed by a modifier constitute a single taxable supply of a modified vehicle to you? | A1: Yes | Q2: Is the modified vehicle a luxury car on which luxury car tax is payable? | A2: Yes This private ruling applies for the following period: 1 July 20XX to 30 June 20XX

Relevant facts and circumstances: You are registered for goods and services tax (GST) and are not in the business of trading luxury cars. You entered into a sales contract with the dealer to purchase a luxury car, with modifications (the modified vehicle). Prior to delivery of the modified vehicle, the dealer will arrange with the modifier to complete a series of modifications. In summary, the modifications include: • X gross vehicle mass (GVM) upgrade, • modifications required as a consequence of the GVM upgrade, including new tyres, which are required under the Australian Design Rules to support the additional gross vehicle mass, • internal modifications, including installation of a false floor in the rear cargo area, and cargo barrier behind the second row of passenger seats, and • external modifications, including installation of a bull-bar, ladder racks, commercial paint job and decals advertising your business. The GVM upgrade is a federally approved second stage manufacturer modification. The luxury car is a five-seater SUV wagon classified as an MC category passenger vehicle under the Roads Vehicle Standard Act 2018 (RVSA). The rear cargo area includes anchorage points and a mounting plate for the installation of additional seats. The car is designed by the manufacturer to hold a maximum of X passengers. The modified vehicle will also be an X, registered for on-road use with seating capacity for a maximum of five passengers. The anchorage points and mounting plate for additional seats will remain installed in the vehicle. The modified vehicle will be registered as an X goods carrying vehicle due to the GVM upgrade. In order to install and utilise additional seats in the modified vehicle, the false flooring in the rear cargo area of the vehicle would need to be removed, additional seats would then need to be purchased and installed, and the vehicle would need to be re-registered for on-road use with the additional seats. Per the installation guide provided for the false flooring to be installed, the steps involved in installing the false flooring is as follows: • Removal of the carpeted cover behind the rear seats and side panels by removing the carpet clips and tie-downs, and side panels. • Removal of the plastic trim across the back of vehicle, along with plastic tray with toolkit to fully expose bolts for back support frame. Removal of plastic tray with toolkit by pulling up to detach trim clips. Removal of bolts and framework from under the tray. Disconnect the seatbelt alarm cables - These will remain disconnected. • Removal of bolts in the seats and remove seats to expose floor pan. • Assembling subframe brackets • Insert frame into vehicle, lining up with existing captive nuts in floor, then secure using bolts, washers and spring washers. Replace the original corner factory brackets that were under toolkit tray and reinstall the plastic trim/toolkit. • Install the 2x rear tie downs to the timber board placing the 2x tie down plates underneath the board and spring-loaded tie downs on top and securing with button heads per tie down. • Insert carpeted timber board into vehicle by carefully lifting it as to not damage trim. Centre it across the frame. • Attach to steel subframe by installing tiedowns directly to the subframe with screws per tie down to secure the board to the subframe. Regarding the agreement for acquisition of the modified vehicle, you have advised. • the dealer will issue a tax invoice to you, for the cost of the vehicle, and the modifications to be completed by the modifier, • you will pay the dealer for the cost of the car and the modifications, • the sales contract between you and the dealer is contingent upon completion of the modifications by the modifier, • the dealer accepts responsibility for any warranty obligations owed to you in respect of the car, and the modifications, • you will not receive the car until the modifications are complete, and • the dealer will deliver the modified vehicle to you.

Relevant legislative provisions: A New Tax System (Luxury Car Tax) Act 1999 Division 5 | A New Tax System (Luxury Car Tax) Act 1999 section 5-5 | A New Tax System (Luxury Car Tax) Act 1999 section 5-10 | A New Tax System (Luxury Car Tax) Act 1999 Division 7 | A New Tax System (Luxury Car Tax) Act 1999 section 25-1 | A New Tax System (Luxury Car Tax) Act 1999 subsection 27-1 | A New Tax System (Goods and Services Tax) Act 1999 section 69-10 | Income Tax Assessment Act 1997 section 995-1 | Income Tax Assessment Act 1997 section 40-230

Reasons for decision: Summary: Yes | Detailed Reasoning - Detailed reasoning: Luxury car tax (LCT) is payable where there is a taxable supply or taxable importation of a luxury car (Division 5 and Division 7 of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act)). Section 5-5 of the LCT Act states that you must pay the luxury car tax payable on any taxable supply of a luxury car that you make. Ordinarily, a supply of goods occurs when the vendor completes the sale of those goods to you. In the case of cars, it is the dealer who makes the supply, and where that supply concerns a luxury car, it is the dealer who becomes liable to pay luxury car tax (LCT). Dealers may incorporate the cost of their LCT liability into the total sale price of a luxury vehicle sold to a retail customer, in addition to the vehicle's base price and any GST payable. LCT is calculated in reference to the luxury car tax value (LCT Value) of a luxury car, as defined in section 5-20 of the LCT Act. Where a car is sold with modifications, the LCT value of the car will include the value of those modifications, unless the modifications are solely for the purpose of adapting the vehicle for a person with disability. Sections 5-5 and 5-10 of the LCT Act refer to the 'taxable supply' of a luxury car. The LCT Act relies upon the meaning of supply contained in the GST Act. The LCT Act does not provide any guidance as to when a supply of a luxury car is considered to have occurred, nor does it place any significance on the time of physical delivery or registration of a vehicle. Accordingly, there is no basis upon which to conclude that a supply of a luxury car is contingent upon physical delivery or registration of the vehicle. The Commissioner's view on the meaning of "supply" is provided in Goods and Services Tax Ruling GSTR 2006/9 Goods and services tax: supplies (GSTR 2006/9). Paragraph 119 of GSTR 2006/9 states: 119. Examining the agreement or other reciprocal legal relationships is the starting point in analysing an arrangement to determine who is making a supply to whom. Regarding the agreement for acquisition of the modified vehicle, you have advised the following process: • the dealer will issue a tax invoice to you, for the cost of the vehicle, and the modifications to be completed by the modifier, • you will pay the dealer for the cost of the car and the modifications, • the sales contract between you and the dealer is contingent upon completion of the modifications by the modifier, • the dealer accepts responsibility for any warranty obligations owed to you in respect of the car, and the modifications, • you will not receive the car until the modifications are complete, and • the dealer will deliver the modified vehicle to you. Considering the principles outlined in GSTR 2006/9, the arrangement between you and the dealer concerns a single taxable supply of a modified vehicle to you. Further, noting our decision in respect of question 2, it appears the supplier has incorrectly calculated their LCT liability, as they have not correctly calculated the LCT Value of the luxury car for the purposes of section 5-20 of the LCT Act. LCT Payable on the supply of a luxury car is determined by the vehicles 'Luxury car tax value' (see section 5-20 of the LCT Act). The LCT Value incorporates the value of all supplies made in relation to the car, before the end supply of the car. This means that, where you receive the modified vehicle under a single taxable supply, LCT will be payable on the value of the modifications. | Detailed Reasoning - Question 2: Is the modified vehicle a luxury car on which luxury car tax is payable? | Summary: Yes | Detailed Reasoning - Detailed reasoning: Section 25-1 of the LCT Act provides the definition of a luxury car and states: Meaning of luxury car: 1) A luxury car is a car whose luxury car tax value exceeds the luxury car tax threshold. 2) However, a car is not a luxury car if it is: a) a vehicle that is specified in the regulations to be an emergency vehicle, or that is in a class of vehicles that are specified in the regulations to be emergency vehicles; or b) specially fitted out for transporting disabled people seated in wheelchairs (unless the supply of the car is GST-free under Subdivision 38-P of the GST Act); or c) a commercial vehicle that is not designed for the principal purpose of carrying passengers; or d) a motor home or campervan. Items marked with an are defined in the dictionary at section 27-1 of the LCT Act. Section 27-1 of the LCT Act defines a car is as follows: car means a motor vehicle (except a motor cycle or similar vehicle) that is: (a) designed to carry a load of less than 2 tonnes and fewer than 9 passengers; or (b) a limousine (regardless of the number of passengers it is designed to carry) motor vehicle means a motor-powered road vehicle (including a 4 wheel drive vehicle). | Detailed Reasoning - The luxury car (prior to modification): The luxury car is a motor-powered road vehicle with seating capacity for X passengers including the driver and is designed to carry a load of less than X tonnes, and therefore falls under the definition of a car for the purposes of the LCT Act. Notably, the maximum seating capacity of the car is X passengers. This requires the installation of additional seats in the rear cargo area, utilising existing anchorage points and mounting plate to instal the seats. The car falls under the definition of a luxury car in the first instance because the vehicle has an LCT value above the LCT threshold (the threshold for 20XX-XX financial year is $XX or $XX for fuel efficient vehicles). | Detailed Reasoning - The modified vehicle:: Paragraph 25-1(2)(c) of the LCT Act determines whether a modified vehicle is a luxury car on which LCT is payable. A car is not a luxury car if (a) it is a commercial vehicle and (b) is not designed for the principal purpose of carrying passengers. The Commissioner's views regarding which vehicles are considered commercial vehicles, and the principal purpose of a vehicle, are detailed in Luxury car tax determination 2023/1 (LCTD 2023/1) Luxury car tax: how to determine the principal purpose of a vehicle . The factors considered by the Commissioner when assessing the principal purpose of a car are outlined at paragraph 13 of LCTD 2023/1. When considering modifications to a vehicle, paragraph 16 of LCTD 2023/1 clarifies that only permanent modifications are considered when assessing principal purpose, modifications which are readily reversible are not ordinarily considered. LCTD 2023/1 clarifies that modifications are considered to be 'readily reversible' because they mount easily to the existing design of the car and do not affect or alter the existing design of the car. Example 3 of LCTD 2023/1 provides several examples of modifications of readily reversible modifications and includes: • different tyres • a roof bar • a platform rack • stickers with business logos • seats which are folded down • shelving, which is attached to the seats' existing anchorage points, will be installed throughout the rear of the car • a rubber mats placed over the rear cargo area • a protective screen/barrier, attached using plastic vice grips, will be installed behind the driver's seat. Importantly, whether a modification is considered significant or minor, permanent or readily reversible, requires consideration of how the modification is completed. In this respect, paragraphs 23-25 of LCTD 2023/1 provides as follows: 23. Minor improvements to existing design features, or modifications directed equally to the carriage of goods or passengers, will not cause a change in design that alters a vehicle's principal purpose. 24. Modifications will generally be considered minor where they involve the replacement of existing parts with new parts which perform the same essential function. Minor modifications are readily accommodated by the original design of the vehicle and include upgrading a vehicle's suspension and differentials by replacing these parts with improved or different specification parts. 25. Significant modifications that alter a vehicle's design will typically involve alteration of the vehicle itself and the addition or removal of parts, especially where this requires inspection by a regulator (that is, a State or Federal Authority, or a delegate of such an Authority) to ensure the vehicle can continue being safely used on a public road. Significant modifications are ordinarily not accommodated by the original design of the vehicle, requiring new parts to be fabricated or existing parts to be modified so that they can be utilised by the vehicle. Significant modifications include the conversion of a wagon into a utility vehicle by cutting the body of the vehicle to lengthen it and installing a goods-carrying tray behind the passenger cabin. Considering the modifications which will be completed to the car, the GVM upgrade is considered to be not readily reversible. The installation of the cargo barrier, false flooring, tyres, bulbar, ladder racks, paint job and decals are considered readily reversible modifications on the basis that the modifications are readily accommodated by the unmodified vehicle's existing design. The modifications are akin to those detailed in Example 1 and Example 3 of LCTD 2023/1, noting the following comparisons: • both vehicles are registered for on-road use with X passenger seats, • the vehicle in Example 1 of LCTD 2023/1 has the anchorage points and mounting plate for additional seats removed, • your modified vehicle, will retain the anchorage points, mounting plate, and occupant space etc. to readily accommodate the installation of additional seats, • your modified vehicle incorporates additional modifications, many of which are considered to be readily reversible minor modifications; and • while the anchorage points and mounting plate in the rear of the vehicle are obstructed by the installation of false flooring, the installation of the false flooring is considered to be a readily reversible modification. Accordingly, there is no permanent obstruction which prevents use of the mounting plate or anchorage points in the rear cargo area for the installation of additional seats. The modified vehicle continues to be a luxury car for the purposes of section 25-1 of the LCT Act, and as such luxury car tax will be payable on supply of the modified vehicle by the dealer.

Reasons for decision: This is to explain how we reached our decision. This is not part of the private ruling.