Private ruling: GST - car
Date of advice: 22 June 2023
Published: 14 August 2023
Ruling period: 1 July 2022 to 30 June 2023

Ruling: Q1: Is the Vehicle a 'car' as defined in section 195-1 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes, the Vehicle is a 'car' under the GST Act. | Q2: If the answer to Question 1 is yes, would the Vehicle be GST-free if the requirements of section 38-505 of the GST Act are met? | A2: Yes, if you meet the requirements of section 38-505 of the GST Act the Vehicle is eligible to be GST-free.

Relevant facts and circumstances: You are not registered for GST. You intend to purchase a Vehicle with selected options fitted by the car supplier including a bull bar, tow bar and tray. You have advised the Vehicle has the following specifications with the included options: • The gross vehicle mass (GVM) is 3,510 kg. • The basic kerb weight is 2,564 kg. • The seating capacity is 5 people.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 195-1 | A New Tax System (Goods and Services Tax) Act 1999 section 38-505 | Income Tax Assessment Act 1997 section 40-230 | Income Tax Assessment Act 1997 section 995-1

Reasons for decision: Summary: "Car" is defined under section 195-1 of the GST Act as having the meaning given by section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997). "Car" is defined under section 995-1 of the ITAA 1997 and means a motor vehicle (except a motor cycle or similar vehicle) designed to carry a load of less than 1 tonne and fewer than 9 passengers. What a vehicle is 'designed to carry a load of' is considered in Miscellaneous Taxation Ruling MT 2024 Fringe benefits tax: Dual cab vehicles eligibility for exemption where private use is limited to certain work-related travel (MT 2024) para 10 and 11: 10. Whether a particular vehicle is designed to carry a load of one tonne or more is to be determined on the same basis as that applied in determining eligibility for the former income tax investment allowance. 11. Consistent with that approach, the designed load capacity of a motor vehicle is to be taken as the gross vehicle weight as specified on the compliance plate by the manufacturer (broadly, the maximum all-up loaded weight), reduced by the basic kerb weight of the vehicle. For this purpose, basic kerb weight is synonymous with unladen weight, as specified in the Australian Design Rules, being the weight of the vehicle with a full tank of fuel, oil and coolant together with spare wheel, tools (including jack) and installed options. It does not include the weight of goods or occupants. Thus, the designed load capacity of a motor vehicle = GVM − basic kerb weight. The designed load capacity of the Vehicle is 946 kg (3,510 kg - 2564kg), and it is designed to carry 5 passengers. Therefore, the Vehicle meets the definition of a "car" in subsection 995-1(1) of the ITAA 1997 and thus, section 195-1 of the GST Act. Subsection 38-505(1) 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. However, a supply covered by subsection 38-505(1) is not GST-free to the extent that the GST inclusive market value of the car exceeds the car limit. Section 195-1 of the GST Act states the 'car limit' has the meaning given by section 40-230 of the ITAA 1997. Section 40-230 of the ITAA 1997, where applicable, adjusts the first element of the cost of a car that is designed mainly for carrying passengers down to the car limit for the financial year in which you started to hold it, if its cost exceeds that limit. Whether carrying passengers is the principal purpose of crew cab vehicles is considered in MT 2024. The approach outlined in MT 2024 is consistent with that adopted under the Australian Design Rules in determining what is a passenger vehicle. It provides that the principal purpose of the crew cab vehicle may be determined by reference to how the majority of the vehicle's load capacity is utilised. If the passenger carrying capacity, calculated on a 68 kg allocation per passenger seat, exceeds the remaining load capacity, the vehicle is treated as being designed for the principal purpose of carrying passengers. The load capacity of the Vehicle is 946 kg, and it is designed to carry 5 passengers. As the Vehicle's passenger carrying capacity of 340 kg (5 passengers at 68 kg each), is less than half of the Vehicle's 946 kg load carrying capacity, it is not considered to be a car that is designed mainly for (or for the principal purpose of) carrying passengers. The Vehicle has a principal purpose of carrying goods and it is not a car mainly designed for carrying passengers, therefore it will not be subject to the car limit under section 40-230 of the ITAA 1997. As the Vehicle is a 'car' for GST purposes, and the car limit does not apply as it is a car with a principal purpose of carrying goods and if you satisfy the requirements of section 38-505 of the GST Act, yes the Vehicle is eligible to be supplied GST-free by the car supplier. You must complete a Declaration for an exemption of GST on a car or car parts - disabled veterans (NAT 3418) and provide this to your car supplier to support supplying the car GST-free.