In a recent Duties Bulletin, the Victorian State Revenue Office (SRO) has offered licensed motor car traders (LMCTs) an opportunity to voluntarily disclose, before Thursday 31 May 2018, any motor vehicles they have incorrectly obtained a duty exemption on over the last five years. By doing this, they will reduce the amount of penalty tax payable to 5%, plus interest on any outstanding duty. The usual penalty tax rate is up to 90% where a voluntary disclosure is not made.

Loan vehicles, service demonstrator vehicles and service loan vehicles attract motor vehicle registration duty. The Victorian SRO says some LMCTs have incorrectly obtained a motor vehicle registration duty exemption for motor vehicles registered and/or used as service demonstrator or service loan vehicles.

Under the Duties Act 2000, the exemption from duty is only on demonstrator vehicles used exclusively for the purpose of sale of another vehicle of the same class. This means that motor vehicles, such as those used for a range of business or private purposes, including, for example, customer loans, service, workshop and deliveries, promotion and use by directors, employees and their family members are not exempt from duty.

It is likely that a compliance program will then be conducted by the SRO where LMCT’s will be audited. Penalty tax will be imposed at between 25% and 90% (plus interest) on any motor vehicle registration duty assessments arising from those audits.

Please contact us if you are concerned that you may have not accounted for motor vehicle registration duty correctly. We can assist you in determining whether you have a liability, and, if so, assisting with you the voluntary disclosure process.

This article was written by John Caravousanos, Partner.