Senate

Revised Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 4 - Amendment of the A New Tax System (Luxury Car Tax) Act 1999

Outline of Chapter

4.1 This Chapter explains a change to the definition of 'car' in the LCT Act. The amendment is contained in Part 2 of Schedule 1 to this Bill.

4.2 Other amendments in Part 2 of Schedule 1 are explained in Chapter 1 (see paragraphs 1.29 to 1.34) and Chapter 11 (see paragraphs 11.36 and 11.37).

Definition of car

4.3 Currently, the definition of car in the LCT Act means a motor vehicle (except a motor cycle or similar vehicle) designed to carry a load of less than 2 tonnes and fewer than 9 passengers (section 27-1). Motor vehicle is defined to mean a motor-powered road vehicle (including a 4 wheel drive vehicle).

4.4 The definition of car is intended to include all passenger cars (including station wagons), all 4 wheel drive vehicles, light trucks, motor homes, campervans and hearses.

4.5 However, some luxury passenger vehicles, such as stretched limousines, are designed to carry more than 9 passengers. Therefore, these limousines do not fall within the LCT Act. This is contrary to the Government's original intention.

4.6 Item 167 amends the definition of 'car' in section 27-1 to include a limousine, regardless of the number of passengers it is designed to carry.