Dealers have until the end of May to make a voluntary disclosure of any stamp duty exemptions they may have incorrectly claimed over the past five years. Such claims would usually have been made on demonstrator or loan vehicles, which are not eligible for the exemption.

In its recent Duties Bulletin, the State Revenue Office (SRO) Victoria said licensed motor car traders (LMCT) had until Thursday 31 May to disclose any motor vehicles they had incorrectly obtained a duty exemption on over the last five years.

John Caravousanos, Partner, HWLE Lawyers, said this would reduce the amount of penalty tax payable to 5 per cent, plus interest on any outstanding duty. The usual penalty tax rate is up to 90 per cent when a voluntary disclosure is not made.

Loan vehicles, service demonstrator vehicles and service loan vehicles attract motor vehicle registration duty. The SRO Victoria says some LMCTs may 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,” Mr Caravousanos said.

“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 LMCTs will be audited. Penalty tax will be imposed at between 25 per cent and 90 per cent (plus interest) on any motor vehicle registration duty assessments arising from those audits.

AADA recommends that if any Dealers are concerned they might not have accounted for motor vehicle registration duty correctly seek advice and help in determining whether they have a liability, and, if so, seek assistance with the voluntary disclosure process.