Private ruling: Luxury car tax
Date of advice: 14 November 2019
Published: February 2020
Ruling period: 2017 - 18 income year | 2018 - 19 income year | 2019 - 20 income year
Date scheme commenced: 1 January 20XX

Ruling: Q1: Is luxury car tax payable on the importation of a Race Car that was built for off road race use only and cannot be registered for use on public roads? | A1: No

Relevant facts and circumstances: You are registered for goods and services tax (GST). You have imported a Race Car into Australia, and luxury car tax (LCT) was applied. You provided a letter from the manufacturer to confirm that the vehicle is for race use only and cannot be registered for use on public roads or highways. You also provided the Race Car Owner's Manual' together with photos of the actual vehicle that you have imported to confirm your vehicle is the same as the one in the manual, and to verify the vehicle has not been subject to any modifications. Your photos show the following features and components of the racing vehicle: · A roll cage · Gearbox · Dashboard · Launch Control · Steering wheels · Wheelie Bar · Parachute The vehicle was imported to race at a number of racing events.

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 25-1 and | A New Tax System (Luxury Car Tax) Act 1999 section 27-1.

Reasons for decision: Summary: The liability for luxury car tax (LCT) arises when a taxpayer makes a taxable importation of a luxury car, under section 7-5 of A New Tax System (Luxury Car Tax) Act 1999 (LCT Act). An exception to this rule is if the vehicle imported is not a luxury car within the LCT Act. What is a luxury car? Section 25-1 defines 'luxury car' as: a car whose luxury car tax value exceeds the luxury car tax threshold . Section 27-1 of the LCT Act defines 'car' as: 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) In turn, 'motor vehicle' is defined to mean: a motor-powered road vehicle (including a 4 wheel drive vehicle) As the vehicle is motor-powered and designed to carry a load of less than 2 tonnes and fewer than 9 passengers, the issue then is whether the vehicle is a 'road vehicle'. What is the meaning of 'road vehicle'? 'Road vehicle' is not defined in the LCT Act. However, guidance could be drawn from the Goods and Services Tax Advice GSTA TPP 077 ('ATO Ruling') which explored the definition of a 'car' and, relevantly, 'motor vehicle' for the purposes of input tax credit claims. The ATO Ruling referred to paragraph 3.2 of the Sales Tax Ruling SST 13 which stated the following: The term 'road vehicle' refers to the class of vehicle, not to the actual use to which a particular vehicle may be put. It is a road vehicle if it is in a class of vehicle that is designed for use on public roads and it would be a road vehicle even though it may never be used or registered for use on public roads. Reference to the class of vehicle is further elaborated in the ATO Ruling accordingly: If the nature and fundamental design of a vehicle used as a rally or racing car, including any modifications or add-ons, makes it of a class of vehicle suitable and capable of being registered for use on public roads, anywhere in the world, it is a 'car' as defined. ... For example, where a standard passenger car is modified for rallying or racing and the modifications do not extend to changing its fundamental design, it will remain a car. If the rally car or racing car, including any modifications or add-ons, is of a class of vehicle designed to be used only on racing or rally circuits or off-road, and is not capable of being registered for use on public roads, it is not a 'car' as defined. ... For example, where a racing car is designed and built from the ground up, or a standard passenger car is redesigned, stripped and rebuilt so that nature and fundamental design of the vehicle makes it incapable of being registered for use on public roads, it is not a 'car' as defined. Is the Race Car a 'luxury car'? The vehicle is a racing vehicle.The manufacturer has stated that the vehicle is for race use only and cannot be registered for use on public roads or highways. The vehicle's manual further confirmed that the vehicle is intended for off-road use only.The vehicle also has various features and components of the racing vehicle that would not be found on a typical car able to be driven on public roads. The vehicle was imported to race at various racing events. Accordingly, Race Car falls within the class of vehicle designed to be used only on racing or rally circuits or off-road, and is not capable of being registered for use on public roads. The vehicle is not a 'car' under section 27-1 of the LCT Act and therefore not subject to LCT.