Private ruling: GST - sale of car modified for people with disability.
Date of advice: 8 June 2018
Published: August 2018
Ruling period: None

Ruling: Q1: Is GST on the sale of a car with medical aid modifications apportioned between the car and medical aids? | A1: No.

Relevant facts and circumstances: ● You import vehicles with disability modifications such as wheelchair lifts, seat harness etc, on the vehicle. ● You are registered for goods and services tax (GST). ● You pay GST on the full imported value of the vehicle and obtain Australian Compliance Certificates for the vehicles. ● You sell the vehicle to the public. If the purchaser doesn’t provide you with the tax concession declaration form, then you do not sell the vehicle as GST-free. ● You wish to know whether the value of the disability modifications should be apportioned as GST-free when the vehicle is sold to the public.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 – section 38-505

Reasons for decision: Summary: You make a taxable supply if you make the supply for consideration, the supply is made in the course or furtherance of an enterprise that you carry on; the supply is connected with the indirect tax zone; and you are registered or required to be registered. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. Under the GST Act the sale of modified car for people with disability is not input taxed. Therefore, we need to consider whether the sale would be GST-free. Subsection 38-505(1) of the GST Act provides that a supply is GST-free if it is a supply of a car to an individual who: (a) has served in the Defence Force or in any other armed force of Her Majesty; and (b) as a result of that service: (i) has lost a leg or both arms; or (ii) has had a leg, or both arms, rendered permanently and completely useless; or (iii) is a veteran to whom section 24 of the Veterans’ Entitlements Act 1986 applies and receives a pension under Part II of that Act; or (iv) is receiving a Special Rate Disability Pension under Part 6 of Chapter 4 of the Military Rehabilitation and Compensation Act 2004 , or satisfies the eligibility criteria in section 199 of that Act; and (c) intends to use the car in his or her personal transportation during all of the Subdivision 38-P period. The individual who satisfies the criteria explained in section 38-505 of the GST Act is required to complete the Declaration for an exemption of GST on a car or car parts and present it to the supplier, to purchase the car as GST-free up to the car cost limit for depreciation. If the individual failed to produce the declaration form to the supplier at the time of purchasing the car, the sale of the car to the individual will not be GST-free and the supplier is required to remit the GST on the sale of the car to the ATO. Therefore, if you supply a car with modifications for people with a disability and the purchaser does not satisfy the criteria under section 38-505 of the GST Act, and does not provide you with the declaration for an exemption of GST the sale of the modified car will be taxable supply. The sale of the whole vehicle including the modification would be taxable supply and cannot be apportioned between the vehicle and the value of the modifications.