Common GST categories
Cars for disabled people
Cars modified for use by people with a disability can be GST-free when they meet the conditions in the GST law, as can certain modifications made to a vehicle.
The GST law includes a concession for vehicles that have been specially designed or modified for people with disabilities. Where a car has been modified so that it can be used by a person who has a disability, such as one who uses a wheelchair, the supply of the vehicle can be GST-free if the legal conditions are met. The aim is to reduce the cost of mobility for people who need specially adapted vehicles.
The concession is not limited to complete vehicles. Supplies of modifications to a vehicle that make it suitable for use by a person with a disability can also be GST-free in many cases. Examples include fitting a wheelchair ramp or hoist, hand controls, a lowered floor, or other approved adaptations. As with other GST-free categories, the supplier does not charge GST but can still claim credits for the GST on the costs of producing or modifying the vehicle.
The conditions in the law matter. The vehicle, the modifications and the way it is supplied need to match what the legislation describes. A standard car that has not been modified will not qualify just because the owner has a disability. Likewise, simply buying a general accessory that is not a modification for a disability may not be GST-free. Suppliers should keep records and documentation showing the nature of the modification and the basis for the GST-free treatment.
Other taxes can also be relevant. Luxury car tax, for instance, has its own rules and concessions, and the car limit used for the luxury car tax is set by the ATO and changes. Registration, stamp duty and insurance are state and territory or private matters and are not controlled by the GST concession. A buyer should check each cost separately.
Common misunderstandings include assuming any vehicle bought for a person with a disability is GST-free, that all accessories qualify, or that the concession is available to anyone who receives disability payments. The test is based on the vehicle and the modifications. Another error is forgetting that the GST-free sale by a dealer should still be reported on its BAS as a GST-free sale, with an appropriate record kept.
If you are buying or selling a modified vehicle, ask for documents showing the modifications and discuss the GST treatment with the supplier before signing. This content is general information only, so confirm your situation with the ATO or a registered tax professional.
Worked example
A registered vehicle modifier converts a van for wheelchair access and charges $15,000 for the modifications, which qualifies as GST-free. No GST is added to the invoice. The modifier pays $2,200 including GST ($200) for parts and workshop supplies used in the work, and claims the $200 credit on its BAS.
Practical tips
- Ask the supplier to describe the modifications on the invoice, since this helps support the GST-free treatment.
- Check the luxury car tax and state charges separately, because the GST concession does not automatically cover them.
- Keep photographs and a description of the modifications with the sale documents, as they help show what was supplied.