On behalf of its Victorian Automobile Dealers Association (VADA) members, the VACC recently gained an exemption from stamp duty for cars used by a dealer to demonstrate for the purposes of the sale of another vehicle of the same class and exception for vehicles that are made available at no charge by a dealer for use while the customer’s car is being serviced.
The key here is that the exemption stands as long as the dealer does not charge the customer for the use of the car.
This, however, has called into question the excess reduction fee which is paid by the customer. Normally an insurance excess of, say, $2500, can apply if the customer damages the car but dealers offer to waive the excess if the customer pays a fee of, say, $40.
In a bulletin to members, the VACC says it has fielded many queries from licensed dealers seeking advice as to whether an “excess reduction or waiver fee” paid by a customer in relation to insurance cover on a service demonstrator vehicle (SDV) amounts to a “charge”.
They were concerned that such an insurance waiver charge would prevent the vehicle qualifying as an SDV because the charge triggered a change of use.
The bulletin to members said: “VACC has held several robust conversations with the State Revenue Office (SRO) and received written clarification from SRO as (to) how this issue should be treated by dealers.
“The SRO said that as a result of the excess waiver fee, the vehicle is not made available without charge, so therefore is no longer an SVD for the purpose of the Duties Act 2000 because a change of use is triggered.”
The VACC argued that provision of an SDV “does not constitute a rental as under pretext of rental vehicle there is no time (daily, weekly, etc) or kilometre charge and therefore would not require a change in use”.
Advice from Tier One car rental companies was used in support of the VACC argument.
The VACC also argued an insurance excess applicable on an SDV is the same methodology/concept/liability that a consumer would have on their own personal car and that any consumer would be obligated to pay in the event of accident or damage to their personal car.
“SRO could not be moved on this issue and stuck to their argument that a charge/fee was being applied to a vehicle when affected with an insurance excess reduction waiver fee,” the chamber said.
Meanwhile, the VACC says it is continuing dialogue with the SRO and other government agencies to remove the cost of dealers having to apply motor vehicle duty to accessories or aftermarket fittings on new cars.
VADA members are also participating in a dealer-only focus group, convened at the request of Victorian treasurer Tim Pallas, that will deliver a business impact assessment (BIA) to government and highlight how the new super-luxury duty is affecting dealerships and the state government coffers.
The focus group is being funded by the VACC and facilitated by Sam Venn and a team at Deloitte.
By John Mellor
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