Motor vehicle duty is payable under the Duties Act 2000 (the Act) when:
- A motor vehicle is first registered with VicRoads,
- Registration is transferred into someone else’s name, or
- The predominant use of a motor vehicle changes
It is calculated on the dutiable value of the vehicle. Revenue Ruling DA.022 clarifies the meaning of dutiable value of a new motor vehicle.
A licensed motor car trader (LMCT) has certain responsibilities under the Act regarding registration and payment of duty. There are also exemptions available to LMCTs. Chapter 9 of the Act contains the relevant provisions.
Registration and duty payments
You must register a new vehicle with VicRoads. You can register new vehicles directly into a customer’s name or into your own name.
In either case, duty must be paid to VicRoads at the time of the registration application, unless an exemption applies.
Applications for the transfer of registration of a used vehicle into the buyer’s name must also be lodged with VicRoads. You must pay duty and the transfer fee within 14 days of delivery of the vehicle.
Both the buyer and the LMCT are jointly and severally liable to pay the duty. If you, as an LMCT, have collected the duty from the buyer, you are solely liable for paying the duty to VicRoads.
Refunds, exemptions and reductions
Refunds for purchasers
If you collect too much duty from a vehicle purchaser, then the purchaser is entitled to be refunded the excess amount from you.
In such cases, you should contact the SRO via email to arrange authorisation of a refund from VicRoads, which you can then pass on to the purchaser.
Refunds for dealers
You can request a duty refund in certain circumstances, such as overpayment, sale cancellation, incorrect registration or double payments.
In such cases, you should contact the SRO via email, referring to "Motor Vehicle Duty Exemption/Refund" in the subject line, to arrange authorisation of a refund from VicRoads.
What exemptions are available?
If you are an LMCT carrying on the business of:
- wholesale dealings in motor vehicles, you may be entitled to an exemption on trading stock which is used solely for that purpose.
- retail dealings in motor vehicles, you may be entitled to an exemption on trading stock or demonstrator vehicles which are used predominantly for either or both of these purposes.
It is important that you apply these exemptions correctly. Licensed motor car traders are not automatically entitled to a duty exemption on every car acquired. For example, loan cars are not exempt from duty.
You must lodge an application with all supporting documents relevant to the circumstances of each exemption/reduction to enable us to process your request.
Detailed information about these exemptions is contained in Revenue Ruling DA.034.
Change of vehicle use from trading stock to demonstrator vehicle
Duty is charged when the predominant use of a motor vehicle, which was previously exempt from duty because of its use as trading stock or a demonstrator vehicle, changes to some other use.
You must notify us within 14 days when the use of the motor vehicle changes from 'solely/primarily for the purpose of sale/demonstration' to another purpose, such as a customer loan car or service vehicle.
You must use this form to notify the SRO of a "change in use" of a motor vehicle, including heavy trailer, registered in the name of an LMCT from "solely/primarily for the purpose of sale/demonstration" to another purpose, such as customer loan car or service vehicle.
Revenue ruling DA.035 provides guidance about determining when a change in the predominant use of a motor vehicle, from trading stock or a demonstrator vehicle, has occurred.
New vehicles may be sold as part of a drive-away deal. You only have to pay duty on the dutiable value of the vehicle, not the drive-away deal price. To calculate the dutiable value of the drive-away deal, registration costs must be subtracted from the drive-away deal price with the balance divided by the relevant dividing factor.
The SRO conducts compliance activities, including data matching, focused on validating dutiable values declared on applications for registration and transfer. Verification of applicants' entitlements to the duty exemptions they have received for individual vehicles is also carried out.
Penalties may apply in cases of undervalued motor vehicles and incorrectly claimed exemptions.
Refer to the links below for more information: