Contribution to this article by Emmeline Granger, Graduate
The Full Federal Court of Australia has upheld the Federal
Court's decision that the "Hummer", and potentially
other vehicles not fitting within the traditional description of
"luxury car", will now be subject to the luxury car tax
("LCT") on top of GST and other customs
and excise duties wherever applicable.
Our e-alert dated 25 May 2009 reported that the Administrative
Appeals Tribunal ("AAT") had decided
that the Hummer was subject to the LCT. By our e-alert dated 1
March 2010, we reported that a single judge of the Federal Court
had dismissed an appeal made by the taxpayer, Dreamtech
International Pty Ltd ("Dreamtech"), and
upheld the decision of the AAT.
Appeal to the Full Federal Court
Dreamtech appealed again to the Full Federal Court. Its primary
argument was that the question of whether the Hummer fell within
the definition of "limousine" in A New Tax System
(Luxury Car Tax) Act 1999 ("LCT
Act") was a question of fact or a question of law. By
its decision dated 25 August 2010, the Full Federal Court agreed
with the AAT and the Federal Court, deciding that the definition of
"limousine" was a question of fact and was to be given
its ordinary meaning.
The Court explained that factual determinations are a matter for
the AAT. The AAT had decided that the word "limousine"
"incorporate[d] the fact that a limousine is usually
considerably larger than a standard road vehicle, conveying a sense
of luxurious motor transport driven by a chauffeur". The Court
found that the AAT had legitimately decided that the Hummer fell
within this definition.
The impact of the decisions
The Full Federal Court decision has confirmed that a wider class
of cars may now be caught by the tax if their LCT value exceeds the
threshold. As reported in our e-alert dated 1 March 2010, this
potentially could include four wheel drives with features that
could be considered luxurious by a class of persons, or other large
vehicles that may be colloquially called "limousines"
despite having significant design discrepancies.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
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