Contribution to this article by Emmeline Granger, Graduate at Law
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.
Earlier proceedings
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.
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