Private ruling: Luxury car tax
Date of advice: 21 July 2022
Published: November 2022
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is luxury car tax payable on the importation of a "Race Car", that is specifically designed and built for racing and rally circuits only, for the purposes of competition on a commercial basis? | A1: No

Relevant facts and circumstances: The Race Car is manufactured overseas and will be imported into Australia for racing purposes. The Race Car is specifically designed for privateer teams and drivers at every level of competition. The Race Car has features such as roll cage, safety harness with required mounting points, competition seats and wheels, and doors specially fitted for safety purposes etc. The Race Car is considered to fall within the class of vehicle designed to be used only on racing or rally circuits and is not suitable or capable of being registered for use on public roads.

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 | 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. Section 25-1 of the LCT Act 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 Race Car 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 Race Car is a '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. The Race Car has various features and components of a racing car that would not be found on a typical car driven on public roads, for example it has safety cage, safety harness with a minimum required mounting points, competition seats and wheels etc. The Race Car was specifically designed for privateer teams and drivers at every level of competition and is supplied ready for racing. The Race Car will be imported for the purposes of competition on a commercial basis. The Race Car is considered to fall within the class of vehicle designed to be used only on racing or rally circuits and is not suitable or 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 LCT is not payable on the vehicle.