Private ruling: Luxury Car Tax
Date of advice: 25 October 2018
Published: February 2019
Ruling period: 2018-2019 income year | 2019-2020 income year | 2020-2021 income year | 2021-2022 income year
Date scheme commenced: 1 October 2018

Ruling: Q1: Is luxury car tax payable on the sale or importation of the 4x4 off-road truck that is a single cabin without a tray fitted to the rear of the vehicle? | A1: No | Q2: Is luxury car tax payable on the sale or importation of the 4x4 off-road vehicle that is a single cabin with a tray fitted to the rear of the vehicle? | A2: No | Q3: Is luxury car tax payable on the sale or importation of the 4x4 off-road vehicle that is a dual cabin without a tray fitted to the rear of the vehicle? | A3: No | Q4: Is luxury car tax payable on the sale or importation of the 4x4 off-road vehicle that is a dual cabin with a tray fitted to the rear of the vehicle? | A4: No

Relevant facts and circumstances: The entity (you) are registered for Goods and Services tax. You intend to import the 4x4 off-road vehicle into Australia. This vehicle is developed for off road, heavy-duty challenges and military applications. The vehicle is predominantly designed for the carriage of goods in the harsh surrounds of an operational mine site, including and in particular, underground operations. It also has tremendous ability to operate in difficult conditions and will be fitted with a diesel engine with a specific emissions rating. You provided a brochure for the 4x4 off-road vehicle which complemented and supported the design of the vehicle as described above. The photographic representations in the brochure displayed the vehicle’s various internal and external features and depicted the use of the vehicle in non-recreational off-road environments, including an illustration of the maximum height it can travel whilst submerged in water. The brochure also detailed the specifications of the vehicle’s weight and capacities for both the single and dual cab models, with or without a tray fitted to the rear of the vehicle. The specifications are: ● The gross vehicle mass (GVM) of all vehicles (regardless of cabin size or equipment of the tray) is 4,300kg. ● The kerb weight of a single cabin vehicle without a tray is 2,580kg ● The kerb weight of a single cabin vehicle with a tray is 2,840kg ● The kerb weight of a dual cabin vehicle without a tray is 2,710kg ● The kerb weight of a dual cabin vehicle with a tray is 2,910kg. The single cabin models seat 2 passengers (including the driver) whereas the dual cabin models seat 5 passengers (including the driver). Upon finalisation of the homologation process to satisfy the Australian Design Rules, you intend to hire or sell the vehicle to mining companies in Australia.

Relevant legislative provisions: A New Tax System (Luxury Car Tax) Act 1999 section 5-5, | 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: Under section 5-5 of the LCT Act, LCT is payable on any taxable supply of a luxury car. Likewise for importations, section 7-5 of the LCT Act states that LCT is payable on any taxable importation of a luxury car. A ‘luxury car’ is defined under subsection 25-1(1) of the LCT Act as a ‘car’ whose LCT value exceeds the LCT threshold. According to section 27-1 of the LCT Act a ‘car’ is defined 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 4 wheel drive vehicles). Regardless of the cabin size or the equipment of a tray, the 4x4 off-road vehicle is a motor-powered road vehicle with a 2 or 5 seater capacity and is designed to carry a load between 1,390kg and 1,720kg. As such the 4x4 off-road vehicle would fall within the definition of a ‘car’ for the purpose of the LCT Act. However, a car is not a ‘luxury car’ for the purposes of the LCT Act if it is a commercial vehicle that is not designed for the principal purpose of carrying passengers. This exemption is stated under paragraph 25-1(2)(c) of the LCT Act: | Detailed Reasoning - 25-1 Meaning of luxury car: (2) However, a car is not a luxury car if it is: (c) a commercial vehicle that is not designed for the principal purpose of carrying passengers; or … For LCT purposes, a commercial vehicle is: ● designed for the principal purpose of carrying goods used for business or trade ● not subject to LCT. These vehicles include: ● vehicles ● hearses ● some vans, for example vans designed to carry a load of less than two tonnes, fewer than nine passengers and have a value over the LCT threshold. Vehicles designed mainly for carrying passengers (including paying passengers), or for sport or recreation purposes, are not commercial vehicles and you may have to pay LCT on them. These vehicles include: ● station wagons ● passenger sedans ● people movers ● sports utility vehicles (SUVs). To work out the main purpose (principal purpose) for which a vehicle has been designed, see Miscellaneous Taxation Ruling MT2024 . Paragraphs 14 to 16 of the Miscellaneous Taxation Ruling MT2024 detail the method to determine whether the principal purpose of a vehicle is for carrying passengers and the relevant extracts state the following: … It is considered that the appropriate basis for determining this issue is whether or not the majority of the designed load capacity is attributable to passenger carrying capacity. This approach is consistent with that adopted under the Australian Design Rules in determining what is a passenger vehicle. For this purpose the designed passenger carrying capacity is to be determined by multiplying the designed seating capacity (including the driver’s) by 68 kg, which is the figure adopted for the purpose of the application of the Australian Design Rules. If the total passenger weight so determined exceeds the remaining “load” capacity, the vehicle is to be treated as being designed for the principal purpose of carrying passengers. This principal when applied to the 4 separate specifications of the 4x4 off-road vehicle (each addressed individually in the questions to this ruling) yielded the following result: 1. Single cab without tray ● the load capacity (GVM – unladen vehicle mass) is 1,720kg ● the passenger capacity for 2 passengers (including the driver) is 2 x 68kg = 136kg ● the remaining load capacity is 1,720kg – 136kg = 1,584kg As the passenger capacity (136kg) does not exceed the remaining load capacity (1,584kg), the 4x4 off-road vehicle single cab vehicle without a tray is treated as not being designed for the principal purpose of carrying passengers. 2. Single cab with tray ● the load capacity (GVM – unladen vehicle mass) is 1,460kg ● the passenger capacity for 2 passengers (including the driver) is 2 x 68kg = 136kg ● the remaining load capacity is 1,460kg – 136kg = 1,324kg As the passenger capacity (136kg) does not exceed the remaining load capacity (1,324kg), the 4x4 off-road vehicle single cab vehicle with a tray is treated as not being designed for the principal purpose of carrying passengers. 3. Dual cab without tray ● the load capacity (GVM – unladen vehicle mass) is 1,590kg ● the passenger capacity for 5 passengers (including the driver) is 5 x 68kg = 340kg ● the remaining load capacity is 1,590kg – 340kg = 1,250kg As the passenger capacity (340kg) does not exceed the remaining load capacity (1,250kg), the 4x4 off-road vehicle dual cab vehicle without a tray is treated as not being designed for the principal purpose of carrying passengers. 4. Dual cab with tray ● the load capacity (GVM – unladen vehicle mass) is 1,390kg ● the passenger capacity for 5 passengers (including the driver) is 5 x 68kg = 340kg ● the remaining load capacity is 1,390kg – 340kg = 1,050kg As the passenger capacity (340kg) does not exceed the remaining load capacity (1,050kg), the 4x4 off-road vehicle dual cab vehicle with a tray is treated as not being designed for the principal purpose of carrying passengers. The brochure marketing the 4x4 off-road vehicle is unequivocal in its visual and written descriptions that the vehicle is designed to be used for heavy duty operations and travel on challenging terrains. The brochure does not suggest that the 4x4 off-road vehicle is a lifestyle vehicle intended for recreational application. In light of the above results, all four specifications of the 4x4 off-road vehicle are not a ‘luxury car’ for the purpose of LCT Act because they are each a commercial vehicle designed for the principal purpose of carrying goods. Neither the sale nor importation of the 4x4 off-road vehicle is a sale or importation of a ‘luxury car’ and thus will not be subject to LCT.