Duties Act 1997 No 123
Historical version for 29 November 2002 to 31 December 2002 (accessed 26 November 2014 at 08:57) Current version
Chapter 6Part 1

Part 1 Introduction and overview

180   Imposition of duty

This Chapter charges duty on the hire of goods.
Notes. 

(1)   Goods is defined in section 182.

(2)   Hire of goods is defined in section 183.

(3)   Different arrangements apply to the imposition and payment of the duty according to whether the hiring out of the goods is done by a person who is in the business of hiring out goods (a commercial hire business) or by another person. Part 2 applies to commercial hire businesses and Part 3 applies to other persons.

(4)   The rate of duty is applied to the amount of hiring charges. Hiring charges are defined in section 189. Different rates of duty are applied, depending on the kind of hire. (There are two kinds of hire and they are specified in section 183.)

181   Hire of goods to which this Chapter applies—jurisdictional nexus

(1)  This Chapter applies to the hire of goods and to a person who hires out goods only if the goods are used solely or predominantly in New South Wales during any period for which a liability to duty is required to be determined.
(2)  A motor vehicle, however, that is registered under the law of an Australian jurisdiction and that is the subject of an equipment financing arrangement is taken to be used, at all times in the course of that arrangement, in the jurisdiction under whose law it is registered.
Note. Equipment financing arrangement is defined in section 184.
(3)  If goods hired under a hire of goods are not used solely or predominantly in any particular Australian jurisdiction, the goods are taken to be predominantly used in New South Wales if, under the hire of goods, the goods are initially delivered in New South Wales.
(4)  For the purposes of this section, goods are predominantly used in New South Wales if they are used more in New South Wales than in any other single Australian jurisdiction.

182   What are “goods”?

For the purposes of this Chapter, goods includes all chattels personal and fixtures severable from realty, but does not include money, livestock or things in action.

183   What is a “hire of goods”?

(1)  A hire of goods is an arrangement under which goods are or may be used at any time by a person other than the person hiring out the goods, unless the arrangement is excluded under section 186.
(2)  There are two kinds of hire of goods, namely:
(a)  an equipment financing arrangement, and
(b)  an ordinary (that is, any other) hire of goods.
Note. The rates of duty are different for the two kinds of hire.

184   What is an “equipment financing arrangement”?

(1)  An equipment financing arrangement is a hire of goods that consists of:
(a)  a hire purchase agreement, or
(b)  some other agreement for a term of not less than 9 months and under which the final payment is payable not earlier than 8 months after the agreement is entered into.
(2)  A hire purchase agreement is a letting of goods with an option to purchase and an agreement for the purchase of goods by instalments (whether the agreement describes the instalments as rent or hire or otherwise), but does not include any agreement:
(a)  by which the property in the goods comprised in the agreement passes at the time of the agreement or on or at any time before the delivery of the goods, or
(b)  for the letting of goods, or for the purchase of goods, together with a letting or purchase of:
(i)  real property or an estate or interest in real property, or
(ii)  a business or an interest in a business.

185   What form may a hire of goods take?

A hire of goods may take any form. It is immaterial whether or not a hire of goods is effected or evidenced by an instrument in writing.

186   Exclusions from the definition of “hire of goods”

(1)  A hire of goods does not include any of the following:
(a)  an arrangement that gives a person a right to use goods that is conferred incidentally with a lease of, or a licence to occupy or use, land if:
(i)  there is no apportionment of consideration between the right to use the goods and the right to occupy or use the land, and
(ii)  duty is chargeable under Chapter 5 (Lease instruments) in respect of the lease or licence,
(b)  a franchise arrangement,
(c)  an arrangement for the hire of an aircraft, ship or vessel, or for the hire of an engine or other component part of an aircraft, ship or vessel,
(d)  an arrangement for the provision of goods to a trader for the purpose of displaying or demonstrating the goods pending their sale or hire to a third party,
(e)  an arrangement comprising a “wet hire” (that is, an arrangement under which an operator is provided by or at the direction of the person hiring out the goods to operate the goods for the hirer),
(f)  an arrangement for the use of goods the provision of which is incidental and ancillary to the provision of a service if the provision of the goods is solely to enable the contractual provision of the service,
(g)  an arrangement made between related bodies corporate,
(h)  an arrangement under which a motor vehicle is subleased by an employee to an employer in connection with the employee’s remuneration or other employment benefits,
(i)  an arrangement for the use, by a person who is partially or totally incapacitated, of an invalid aid or prosthetic device or of any similar aid, device or appliance,
(j)  an arrangement for the use of goods by a public hospital,
(k)  a credit contract within the meaning of the Consumer Credit (New South Wales) Code, or
(l)  an arrangement relating to the use of:
(i)  a book, or
(ii)  an electricity, gas or water meter, or
(iii)  a caravan that is to remain on site.
(2)  Duty is not chargeable under this Chapter on a hire of goods if the person who hires out the goods acquired them at the request of the hirer and has paid duty under Chapter 2 (Transactions concerning dutiable property) on their transfer to that person.

187   Special hiring agreements

A special hiring agreement is a written agreement for the hire of goods:
(a)  that describes the goods in such a way (for example, by reference to the make and model of each item) as to enable the nature or character of the goods to be clearly and readily identified, including the number of items, and
(b)  that does not include:
(i)  an agreement under which the goods may, at any time, be replaced in whole or in part by other goods, except to the extent that the agreement allows replacement if the goods:
•  are lost, destroyed or stolen, or
•  fail or malfunction in the normal course of operation or use, or
•  are temporarily replaced during the servicing, maintenance or repair of the goods, or
(ii)  an agreement under which other goods, whether of the same or a different type, may be additionally provided.
Note. A duty ceiling applies to a hire of goods that is a special hiring agreement. See section 188 (3).

188   What is the rate of duty?

(1)  The duty chargeable on a hire of goods that is an equipment financing arrangement is 0.75% of the total amount of the hiring charges.
(2)  The duty chargeable on a hire of goods that is an ordinary hire of goods is 1.5% of the total amount of the hiring charges.
(3)  The maximum amount of duty chargeable in respect of a special hiring agreement is $10,000.
Note. A duty-free threshold applies to hiring charges received by a commercial hire business in respect of ordinary hires that are not special hiring agreements. See section 199 (2).

189   What are “hiring charges”?

(1)  Hiring charges are payments made to the person who hires out the goods by or on behalf of the hirer, for (or that arise as an incident of) the hire of the goods.
(2)  The following charges are included as hiring charges:
(a)  payments for damage waiver or for damage excess,
(b)  late return fees.
(3)  For a hire of goods to which Part 3 applies, any residual payment payable by the hirer as an indemnity for the agreed value of the goods at the end of the hire is taken to be included in the hiring charges.

190   Payments exempted from “hiring charges”

(1)  The following charges are not included as hiring charges:
(a)  payments for delivery, repositioning, erection, installation, maintenance or cleaning of the goods,
(b)  refundable cash deposits or bonds (unless appropriated as hiring charges),
(c)  insurance premiums payable by the hirer,
(d)  duty paid or payable under this Act or a corresponding Act,
(e)  payments for the sale of goods (such as fuel, replacement parts or theft replacement),
(e1)  any GST payable on the supply to which the hire of goods relates,
(f)  any payment of a type prescribed by the regulations.
(2)  Duty is not chargeable under this Chapter on a payment by the hirer under a hire of goods if title to the goods passes to the hirer as a consequence of the payment.

191   Credit for duty paid in another Australian jurisdiction

(1)  The duty chargeable under this Chapter on a hire of goods is to be reduced by the amount of duty paid on the hire under a corresponding Act.
(2)  Despite subsection (1), the duty on a special hiring agreement that is chargeable with the maximum amount of duty of $10,000 cannot be reduced below $6,000.

192   Splitting or redirection of hiring charges (anti-avoidance provision)

The Chief Commissioner may include, as part of the amount received as hiring charges, any of the following:
(a)  any payments under the arrangement that are not hiring charges, including charges referred to in section 190, that the Chief Commissioner is satisfied have been increased for the purpose of minimising duty under this Chapter,
(b)  any payments that would be hiring charges except for the fact that they are paid to a person other than the person who hires out the goods.

193   Ascertainment and disclosure of place of use of goods

(1)  A person who hires out goods may, in determining the person’s liability to duty, rely on a statement of the hirer as to where the goods will be solely or predominantly used in the course of the hire or, in the case of an unregistered motor vehicle, where the motor vehicle will be registered during the course of the hire, unless the person knows that the statement is false.
(2)  A person who hires out goods is not bound to inquire as to any change in the place of use of the goods or, in the case of a motor vehicle, the place of its registration.
(3)  If goods are solely or predominantly used or, in the case of a motor vehicle, are registered in a place other than the place advised by the hirer in a statement referred to in subsection (1), the Chief Commissioner may assess or reassess the duty payable according to the actual place of sole or predominant use of the goods or, in the case of a motor vehicle, the place of its registration.
(4)  A failure to pay duty on the hire of goods by a person who hires out the goods in due reliance on a statement referred to in subsection (1), is not a tax default for the purposes of the Taxation Administration Act 1996 if the duty is paid within 3 months after the issue of a notice of assessment of the duty.
(5)  A hirer who knowingly falsely represents to the person who hires out goods (or to any person acting for that person) that the goods will be used solely or predominantly outside New South Wales is guilty of an offence.

Maximum penalty (subsection (5)): 100 penalty units.

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