C43/1997 SALES TAX EXEMPTION

Purpose

This instruction provides information on simplified procedures for veterans to obtain exemption from sales tax on new motor vehicles and spare or replacement parts.

Legislation

Exemption from Sales Tax is a benefit under Item 96 in Schedule 1 of the Sales Tax (Exemptions and Classifications) Act 1922 which provides that a person, who as a result of service in the Australian Defence Forces or any other armed force of Her Majesty:

(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 VEA applies and receives a pension under Part II of the VEA

is entitled to an exemption from Sales Tax in respect of new vehicles and spare parts for a motor vehicle owned by him or her and used for personal transportation.

New arrangements

In most cases veterans will now be able to claim a sales tax exemption without having to contact the Department.

At the time of purchase, eligible veterans will personally complete a 'Quotation of Exemption Declaration' form (D3055 5/97) and present it to the motor trader.  They will also present, as acceptable evidence of their eligibility, either;

• a 'gold' Veterans' Affairs treatment card embossed with the initials TPI or,
• for amputees or deemed amputees, a specially issued Veterans' Affairs sales tax exemption eligibility card.

These changes have been approved by the Taxation Department and have been very strongly supported by motor trade associations.

Implementation

In September 1997, every TPI veteran and all veterans receiving a payment under s.27 (items 1 - 8 and 10 - 12) will receive;

• a letter outlining the changes
• an initial supply of form D3055 (5/97) and
• if an eligible s.27 veteran, a special Veterans' Affairs sales tax exemption eligibility card.

The printing run for form D3055 (5/97) will produce supplies for the mailout and additional quantities for State Offices which should receive them in early September.

State Office action

From now on State Offices of the Department of Veterans' Affairs will only be responsible for providing:

• amendments to the information package provided to newly granted TPIs or eligible s.27 cases.
• additional supplies of form D3055 (5/97) on request;
• a small number of letters certifying that a veteran is eligible, for example if requested by a newly eligible veteran who has not received a TPI embossed Gold Card, and 
• a small number of Veterans' Affairs sales tax exemption eligibility cards for newly eligible veterans or as replacements for lost or damaged cards.  (These cards 'peel off' a specially prepared sheet of A4 paper.  Supplies of these and an appropriate Microsoft Word template will be supplied in early September)

Commonwealth veterans

The legislation provides that a sales tax exemption may be available to those who served in an armed force of Her Majesty.

Commonwealth veterans have not been included in the mailout as it is not possible to identify these veterans from the Department's Client Data Base

State Offices will need to develop their own arrangements for the few cases where a Commonwealth veteran wishes to claim an exemption.  It is suggested that, where it is known that a Commonwealth veteran has a prescribed loss of a limb or its function, a letter certifying this could be issued on Departmental letterhead similarly to that for new TPI's.  This will serve as the supporting evidence for their D3055 declaration.

Queries or disputes.

Authoritative information on this benefit can only be supplied by the Taxation Department which has provided the advice set out below.

Vehicle registration  and number of exemptions

Provided that the vehicle is used to transport the eligible veteran, the new vehicle does not have to be registered in the eligible veteran's name.

There is no restriction on the number of vehicles for which an exemption may be claimed and no time limit before another exemption may be claimed.

However, eligible veterans should, for each vehicle;

• intend to keep it for two years or 40,000 kilometres (which satisfies the 'statutory period' set out in the legislation);
• use the vehicle for their personal transportation, and
• use of the vehicle should be real and significant extent - transient or insubstantial use will not be enough to justify an exemption.

Spare Parts and Accessories

A sales tax exemption is available for spare or replacement parts necessary for the reasonable functioning of the motor vehicle or required by law.

Generally, a sales tax exemption will not be available for accessories or equipment (for example radios, fog lights, wind deflectors or ornaments) added to a vehicle after its purchase.  However, the cost of such items, if fitted to a new vehicle, is part of the total new vehicle purchase price for which an exemption is available.

Modifications for handicap.

An exemption is available under Item 98 of the Sales Tax (Exemptions and Classifications) Act 1922(which applies to all purchasers) for adaptations to enable a car to transport, or be driven by, a person with a physical handicap

Retrospective exemption

A 'tax credit' (refund) can be claimed if the spare part or vehicle was purchased after 16 December 1995.  This 'tax credit' is under Credit Ground 2A of the Sales Tax Assessment Act, 1992.

The veteran has to be eligible for an exemption for a refund on the date of purchase, for example by backdating of pension or after a successful appeal.