Private ruling: Luxury Car Tax on Racing Cars
Published: March 2013

Ruling: Q1: Is luxury car tax (LCT) payable on the importation of a vehicle that has been designed to be used as a racing car? | A1: No, LCT is not payable on the importation of a vehicle that has been designed to be used as a racing car.

Relevant facts and circumstances: · You plan to import a vehicle for the purpose of race track events. · The cost of the vehicle is above the luxury car tax threshold as defined in the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act). · The vehicle must adhere to strict compliance specifications if it is to be permitted to participate in the particular track events and other competitions · The vehicle has been provided with import approval by the relevant department. The import approval document is subject to strict conditions. · Regarding the use of the vehicle, the import approval document specifically states the following: 'I approve importation of the motor vehicle(s) described in the Schedule below under regulation 18(1)(c) of the Motor Vehicle Standard Regulations 1989 and section 20(1)(b) of the Motor Vehicle Standards Act 1989 (the Act) on condition that it will only be used in the course of competition and practice associated with competition but will not be used for transport on the public highway including any transport to and from a competition location. The vehicle must not be registered for use in Australia. The vehicle must not be used on public roads in Australia.' An Engineer report describes the vehicle as follows: - the vehicle has been designed as a Racing Vehicle only and is non-compliant with international road regulations. - the vehicle can never be registered or used on roads in Australia. - the vehicle can only be used in the course of competition of and practice associated with competition but cannot be used for transport on the public highway including any transport to and from a competition location.

Relevant legislative provisions: A New Tax System (Luxury Car Tax) Act 1999 7-5, | A New Tax System (Luxury Car Tax) Act 1999 27-1 and | A New Tax System (Luxury Car Tax) Act 1999 25-1.

Reasons for decision: Summary: Section 7-5 of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act) states the following: You must pay the luxury car tax payable on any *taxable importation of a luxury car that you make. (terms marked with asterisks (*) are defined in section 27-1 of the LCT Act) Accordingly, in order for the vehicle to be subject to LCT on it's importation (amongst other things), it must be a luxury car. | Detailed Reasoning - What is a luxury car?: Section 7-5 of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act) states the following: You must pay the luxury car tax payable on any *taxable importation of a luxury car that you make. (terms marked with asterisks (*) are defined in section 27-1 of the LCT Act) Accordingly, in order for the vehicle to be subject to LCT on its importation (amongst other things), it must be a luxury car. | Detailed Reasoning - What is a luxury car?: Subsection 25-1(1) of the LCT Act defines a luxury car as follows: A luxury car is a *car whose *luxury car tax value exceeds the *luxury car tax threshold. If the vehicle is not a car, then it does not come within the meaning of a luxury and as such no LCT will be payable when it is imported. The term car is a defined term in section 27-1 of the LCT Act, which states: car means a *motor vehicle (except a motor cycle or similar vehicle) that is: (a) designed to carry a load of less than two tonnes and fewer than nine passengers; or (b) a limousine (regardless of the number of passengers it is designed to carry). Thus, the vehicle needs to come within the meaning of a motor vehicle for it to be considered as a car. A motor vehicle is defined in section 27-1 of the LCT as follows: motor vehicle means a motor-powered road vehicle (including a 4 wheel drive vehicle). ATO publication ' Luxury car tax' (NAT 3394), states on page 3: The term 'car' does not include: · racing and rally cars that are not road vehicles and cannot be registered for use on public roads in any country in the world. These racing or rally cars are designed for use only on rally or racing circuits. In this particular case, this vehicle is noted for the following: · It is imported subject to the provision that it not be driven on public roads. · It is not to be registered for use in Australia. · An engineer has advised that it is designed as a racing vehicle only and cannot be registered for use on public roads anywhere in the world. Thus, on the basis that the vehicle is designed as a racing car and cannot be registered for use on public roads in Australia and is non-compliant with international road regulations, we are of the view that it is a racing car. Accordingly the vehicle is not a car for LCT purposes, and luxury car tax does not apply. You are therefore not required to pay LCT on the vehicle's importation.