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Offline 360c

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Can we pin this somewhere for the next time somebody asks about "fakey doo" LMCT's ?

Tax office wins luxury car tax case against surgeon

A surgeon bought a Lamborghini Gallardo LP550-2 and claimed it was trading stock for his dealership.
by Misa Han

The tax office won a claim against a surgeon who tried to avoid luxury car tax by setting up a car dealership of one vehicle.

The Administrative Appeals Tribunal found a successful surgeon intentionally disregarded its tax obligations when he bought a single Lamborghini but did not pay the luxury car tax, claiming he bought it as trading stock for his car dealership

The doctor bought a Lamborghini Gallardo LP550-2 Coupe, which had a drive-away price tag of $461,387, for $335,500. The doctor did not pay the luxury car tax because he claimed he was acquiring the car for resale to one of his network of wealthy professional acquaintances.

Ordinarily, anyone buying a luxury car has to pay 33 per cent tax.

The doctor said he took the Lamborghini for test drives with prospective buyers and took the Lamborghini for an occasional "maintenance drive". The car was eventually sold for $300,000 to another dealer less than a year later and the doctor paid the luxury car tax on the $300,000.

The doctor had had been a luxury car enthusiast for some 30 years and used to hang around Ferrari dealerships as a boy. When he grew up, he developed detailed knowledge of vehicle specifications and pricing in the luxury car market.

He set up a car dealership known as Criterion Prestige and became a registered motor dealer. He had his corporate logo printed on business cards, a banner and pens, and advertised the car on carsales.com.au.

The tax commissioner, on the other hand, argued the company had an "unorthodox background" in that it had only one vehicle, no caryard and no dedicated phone line.

UNLIKELY VENTURE

The tribunal ordered the doctor to pay the luxury tax on the initial purchase price, as well as penalties for intentionally disregarding his tax obligations. The tribunal's senior member Bernard McCabe said the surgeon's dream was not "inherently unbelievable" given many professionals often went into unlikely business ventures.

"Many prosperous professionals invest in what are – given their lack of relevant skills and experience – unlikely business ventures, including farms, restaurants, wineries, racehorses and sporting ventures. Some of those ventures are undoubtedly a means to minimise or even avoid tax, but many are not," Mr McCabe said.

"Is it really so hard to believe a successful medical practitioner would wish to deal in luxury cars in light of his lifelong interest in the motor trade? I do not reject that possibility out of hand."

But he said it was difficult to believe the doctor bought the Lamborghini for business because the doctor failed to prove he took a number of friends and acquaintances out for test drives and the financing arrangements expressly said the Lamborghini was not part of the business inventory.

"The rest of the evidence – including the evidence of business cards and pens with a logo, the banner, the advertisement on carsales.com.au, and other minor indicia of a business – does not persuade me the applicant's activities were done in the form of a business."

Correction: The taxapayer's name has been removed from this story after the AFR learned he passed away.




Offline Aircon

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Can we pin this somewhere for the next time somebody asks about "fakey doo" LMCT's ?

Correction: The taxpayer's name has been removed from this story after the AFR learned he passed away.

I guess it's not worth the trouble!!!

I love my car. Buy your own



Offline mhh

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Oh dear. Perhaps a tragedy happened after the story first ran? A sad tale by the look of it.



Offline Fil-Ski


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Get some proper advice if you are going to do it. It reads like it was planned at the local pub. In the judgment it basically spells it out. Have more then one car, document test drives, make sure finance paperwork matches intended purpose. Invest in a $2 sim and some proper storage.



Offline 360c

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Get some proper advice if you are going to do it. It reads like it was planned at the local pub. In the judgment it basically spells it out. Have more then one car, document test drives, make sure finance paperwork matches intended purpose. Invest in a $2 sim and some proper storage.

It takes a lot more than that, I had some specialist legal advice on it years ago. Long story, short - not worth the risk.




Offline anotherforumuser

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In SA and probably most states if you sell so many cars a year, something like six to eight, they pretty much make you get a dealers licence.. so if you want to play that game, by and sell some cheapies to make your licence legit.



Offline 360c

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In SA and probably most states if you sell so many cars a year, something like six to eight, they pretty much make you get a dealers licence.. so if you want to play that game, by and sell some cheapies to make your licence legit.

They deem you to be acting as a defacto LMCT and hold you to the same rules and penalties.

It was quite a while ago now; but in Victoria to be granted an LMCT you had to:

1) Prove financial capacity
2) Pass a criminal history check and be "of good standing".
3) Be able to demonstrate experience in the car trade. For newbies you could be in "partnership" with an experienced trader.
4) Operate out of a stand alone business premises i.e Not a residential house or P.O. Box
5) Have a dedicated phone contact number
6) Have the intent to operate a genuine business that sells more than (10?) cars a year.

There was quite a list; but I think they were the major ones.



Offline anotherforumuser

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I think they might have made Alvin get one here.. Alvin are you around?



Offline mondi

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They deem you to be acting as a defacto LMCT and hold you to the same rules and penalties.

It was quite a while ago now; but in Victoria to be granted an LMCT you had to:

1) Prove financial capacity
2) Pass a criminal history check and be "of good standing".
3) Be able to demonstrate experience in the car trade. For newbies you could be in "partnership" with an experienced trader.
4) Operate out of a stand alone business premises i.e Not a residential house or P.O. Box
5) Have a dedicated phone contact number
6) Have the intent to operate a genuine business that sells more than (10?) cars a year.

There was quite a list; but I think they were the major ones.

I am trying to find the docs but if we lived to the letter of the law we would not be allowed to sell even one car privately. But because ever man and their dog sells their cars they can't all be taken to task over it. The 3 to 4 cars a year was an unwritten rule which I think they have actually put into black and white now, will have a look at the licensing Web site tonight.

I went through the process to get an LMCT and it was such a head fuck I gave up. But I have a few friends who did go all the way. If you get sprung selling without a license, it used to beb $10000 fine per car or something like that I think.



Offline Tiger


  • Joined: Jul 2014

  • Location: McLaren Vale
With TAX, if it's in black and white do it, if it's grey keep away!
Roll on summer



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