You are here

6.9 GST Exemption on Motor Cars and Spare Parts

Document

Last amended: 3 July 2014

"All allowances are constantly under review. The information contained in the Consolidated Library of Information and Knowledge (CLIK) does not replace legislation and any relevant decisions that have been determined by the courts.

No person should rely on the contents of CLIK without first obtaining advice from a qualified professional person."

What is the purpose of a Goods and Services Tax (GST) exemption on motor cars and parts?

The entitlement to purchase new or used motor cars, or car parts, GST-free, is intended to assist eligible veterans with their personal transportation. This scheme is administered by the Australian Taxation Office (ATO). For the purposes of the scheme, a 'car' is defined as a motor vehicle (other than a motorcycle or similar vehicle) designed to carry a load less than one tonne and fewer than nine passengers. The exemption from the GST does not extend to motorcycles (however, see Chapter 6.11 Special Assistance).    

Who is eligible for the GST exemption?

Eligible persons are those who served in the Australian Defence Force or in any other armed force of Her Majesty (for example, A British or a New Zealand veteran, and as a result of that service:

  • have lost a leg or both arms, or
  • have had a leg, or both arms, rendered permanently and completely useless, or
  • receive a disability pension at the special ([glossary:Totally and:] Permanently Incapacitated) rate but are not Temporarily Totally Incapacitated in accordance with the VEA,
  • receive (or are eligible to receive) a Special Rate Disability Pension under the Military Rehabilitation and Compensation Act 2004.

The veteran must intend to use the car for their personal transportation:

  • for at least two years, or
  • until the car is no longer reasonably capable of being used for the purpose for which cars of that kind are ordinarily used, or
  • until a time determined appropriate by the Commissioner of Taxation in special circumstances.  (Following a decision by the Tax Commissioner, eligible disabled veterans will meet the requirements if they intend to use the car for their personal transportation for 40,000 kilometres from the date of purchase.)     
Car depreciation limit

An eligible veteran is entitled to purchase a new or used car up to the 'car limit' (or 'car depreciation limit'), free of GST. A veteran can purchase a more expensive car but the amount in excess of the limit will incur GST. The GST car limit is specified in subsection 40-230 (3) of the Income Tax Assessment Act 1997 (as a guide, the car limit for the 2013–14 and 2014-15 financial years is $57,466). This limit is reviewed each financial year and may change. The GST inclusive market value of the car should disregard any value that is attributed to modifications that are made to the car solely for the purpose of adapting the car for driving by the person or transporting the person. The link at the end of this text takes you to the declaration form required for GST exemption.    

More ?

Declaration to the Commissioner of Taxation – Goods and Services Tax – Disabled Veteran

http://www.ato.gov.au/individuals/content.asp?doc=/content/20181.htm

More ? (go back)

Documents to be completed

To purchase a GST exempt car or car parts, the eligible veteran should complete a 'Declaration for an exemption of GST on a car or car parts – disabled veterans' and present it to the motor trader at the time of purchase. The form is retained by the motor dealer. The veteran also needs to provide the motor dealer, as evidence of eligibility:

The eligible veteran does not pay the GST to the motor dealer.

Car registration concessions

Veterans who are eligible for a car GST exemption may also be eligible for registration concessions and should check this with their relevant state government.

Stamp duty exemption on motor cars

Veterans in receipt of special rate pension or disability pension at the 100% rate or above may be exempt from stamp duty on the purchase of a new or second hand car. This should be checked for each state.

Advice on vehicle taxation matters

Veterans and/or motor dealers may obtain authoritative technical advice on vehicle taxation from the Australian Taxation Office centre at Moonee Ponds, Victoria. The centre's telephone number is (03) 9275-4322.


For the purposes of Part VI of the VEA, a reference to a veteran is taken to be a reference to:

  • a veteran as defined in subsection 5C(1) of the VEA;
  • a member of the Forces as defined in subsection 68(1) of the VEA; or
  • a member of a Peacekeeping Force as defined in subsection 68(1) of the VEA.

For the purposes of Part VII of the VEA, according to subsection 5C(1), veteran means a person (including a deceased person):

  • who is taken to have rendered eligible war service, or
  • in respect of whom a pension is, or pensions are, payable under subsection 13(6) and
  • in Part III and Part VIIC of the VEA includes a person who is:

 

 

The Australian Defence Force includes:

  • Australian Army
  • Royal Australian Navy (RAN)
  • Royal Australian Air Force (RAAF)

Disability pension, for the purposes of service pension and income support supplement, means:

  • a pension paid for incapacity from war caused conditions, or peacetime, peacekeeping or hazardous service caused conditions (other than a war widow's or orphan's pension); or
  • temporary incapacity allowance; or
  • any other payment in respect of incapacity or death resulting from war or war-like operations in which the Crown has been engaged [usually paid by another Commonwealth country].

Permanent incapacity has two meanings depending on the context: (i) and (ii).

(i) for the purpose of invalidity service pension

pre 1/1/2000

The test of permanent incapacity for invalidity service pension changed with effect from 1/1/2000.  Prior to this date, a person was considered to be permanently incapacitated for work if the:

  •       person was permanently blinded in both eyes, or
  •       degree of permanent incapacity was 85% or more.

This prior test of permanent incapacity continues to apply (is saved) for persons who were receiving (or who had claimed) the invalidity payment prior to 1/1/2000.

post 1/1/2000

A person claiming service pension is permanently incapacitated for work for paragraph 37(1) (c) of the if the person:

  •       is permanently blind in both eyes, or
  •       is a veteran to whom section 24 of the VEA applies, or
  •       satisfies the subsection below.

A person satisfies this subsection if:

  •       the person has an impairment that, if it were an injury or disease for GARP, would result in a combined impairment rating of 40 or more under Table 18.1 in that Guide, and solely because of the impairment, the person is permanently unable to do work for periods adding up to more than 8 hours per week, and
  •       the Commission is satisfied that the impairment is permanent.

(ii) for the purpose of invalidity ISS

pre 1/1/2000

The test of permanent incapacity for invalidity ISS changed with effect from 1/1/2000. Prior to this date, a person was considered to be permanently incapacitated for work if the:

  •       person was permanently blinded in both eyes, or
  •       degree of permanent incapacity was 85% or more.

This prior test of permanent incapacity continues to apply (is saved) for persons who were receiving (or who had claimed) the invalidity payment prior to 1/1/2000.

post 1/1/2000

A person claiming ISS is permanently incapacitated for work if:

  •       the person is blind in both eyes, or
  •       the person has a physical intellectual or psychiatric impairment that results in 20 points or more under the Impairment Tables in Schedule 1B of the Social Security Act 1991, and
  •       the Commission is satisfied that solely because of the impairment, the person cannot work for at least 30 hours a week for the following 2 years.

 

 

Veterans' Entitlements Act 1986.

The Repatriation Health Card - For All Conditions is gold in colour and frequently referred to simply as the “Gold Card”.  The card entitles its holder to obtain health care and related services for all the person's identified health care needs, whether they are war-caused or not.