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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 compensation payment 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.) More →More → (go back)
A New Tax System (Goods and Services Tax) Act 1999: Section 38-505
http://www.comlaw.gov.au/comlaw/management.nsf/lookupindexpagesbyid/IP200401808?OpenDocument
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 Assessmen — t 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.
Declaration to the Commissioner of Taxation – Goods and Services Tax – Disabled Veteran
http://www.ato.gov.au/individuals/content.asp?doc=/content/20181.htm
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:
- a Gold Card printed with TPI, or
- any other official document (such as a certificate from DVA) that shows the veteran is entitled to make the declaration. More →More → (go back)
ATO website - Declaration for an exemption of GST on a car or car parts - disabled veterans
http://www.ato.gov.au/individuals/content.aspx?doc=/content/20181.htm
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 compensation payment 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.