Car stamp duty crash coming

CAR dealers are being left to pay the bill for unpaid stamp duty of up to $100,000 a year because of the way the stamp duty is collected.

The problem comes from the fact that stamp duty is based on a vehicle’s ‘market value’ rather than its sale price.

Motor Trades Association CEO Peter Fitzpatrick said the problem often arose when a dealership offered discounts or were handling fleet deals.

“State Revenue says the stamp duty calculation should be based on what an ‘astute buyer’ would pay,” he said.

Mr Fitzpatrick said one solution would be to base the stamp duty calculation on a recommended retail price. Such a system is being used in South Australia.

However, such a shift in the system would probably require changes to the stamp duty rates being charged. It also would create a one-size-fits-all system that could lead to problems for some dealers.

Theoretically, the customer should pay the excess stamp duty, but most dealers are averse to pursuing this.

Stamp duty also must be paid on any dealer-fitted after-market accessories, such as air-conditioning. However, if the customer has the accessories fitted at another establishment, such as Marlows, then there is no stamp duty impost.

Horwarth Perth tax partner Russell Garvey said the Department of State Revenue had been auditing car yards for the past two years.

“The department said it would look at the system again,” he said.

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