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Topic # 185792 5-Dec-2015 21:04
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I can't find the definition of what is the meaning of "sold for the primary purpose of gain", in reference to:

Motor Vehicle Sales Act 2003

8 Who is treated as motor vehicle trader
(1) A person is treated as carrying on the business of motor vehicle trading for the purposes of this Act if—
(a)the person holds out that the person is carrying on the business of motor vehicle trading; or
(b)in any specified period, the person sells more than 6 motor vehicles, unless that person proves that those motor vehicles were not sold for the primary purpose of gain
(c)in any specified period, the person imports more than 3 motor vehicles, unless that person proves that those motor vehicles were not imported to be sold for the primary purpose of gain.

Does it mean gain = profit (making money on the sale, presumably as a car dealer would do), or does it mean gain = sell for money (even if sale is at substantial loss to cost of vehicle)?

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  Reply # 1441138 5-Dec-2015 21:18
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Does it mean gain = profit (making money on the sale, presumably as a car dealer would do), or does it mean gain = sell for money (even if sale is at substantial loss to cost of vehicle)?


It's my understanding it is the former i.e. make money from the sale. Selling for a loss doesn't result in a gain.






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  Reply # 1441144 5-Dec-2015 21:37
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the thing is why would you be going through 6 vehicles in a year if it wasnt for some form of gain?

99.9% of people buy a vehicle for the long term

 
 
 
 


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  Reply # 1441156 5-Dec-2015 22:00
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It means that the motor vehicle was purchased with the intention of making the gain.

So, if you buy a Vauxhall Astra for $3000 and drive it for a year then sell it and some fool offers you $4000, that was incidental to owning the car.

If you buy the same car, put it outside your house, on a lot or whatever and advertise it for sale immediately, you bought that car for the primary purpose of gain from a sale not use.

It is similar in concept to the definition of being in business used in tax law - your activities must be carried out "with the intention of making a profit" which accepts that you won't always actually make one.





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  Reply # 1441160 5-Dec-2015 22:09
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Jase2985: the thing is why would you be going through 6 vehicles in a year if it wasnt for some form of gain?

My work sells 10-15 vehicles each year (selling off the oldest ones to keep the pool "fresh"), but the reason for having the vehicles in the first place is for staff transport. I'd imagine that that's not a "primary purpose of gain".

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  Reply # 1441161 5-Dec-2015 22:10
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Geektastic: It means that the motor vehicle was purchased with the intention of making the gain.

So, if you buy a Vauxhall Astra for $3000 and drive it for a year then sell it and some fool offers you $4000, that was incidental to owning the car.

If you buy the same car, put it outside your house, on a lot or whatever and advertise it for sale immediately, you bought that car for the primary purpose of gain from a sale not use.

It is similar in concept to the definition of being in business used in tax law - your activities must be carried out "with the intention of making a profit" which accepts that you won't always actually make one.


That's right. You don't have to be a "good" car trader to have the intention of making gain.

I don't know what the Motor Vehicle Sales Act 2003 means by "gain" or how the courts interpret it, but the word itself does not preclude selling at a loss. A gain is a benefit or an increase in something that you want or a desired outcome. So, for example, you could sell at a loss to gain cash flow to pay bills rather than become insolvent and loss all equity.

The type of gain is often specified:
Financial gain usually means profit but more technically it is usually an increase in your equity due to some unusual activity.
Pecuniary gain (pecuniary = too do with money) is typically used in relation to crimes
Capital gains where the value of your asset increases without actually selling it for a profit.

A gain where you don't make a profit could be converting an illiquid asset into cash or a more liquid asset without any discount. Another similar example is getting rid of a dud asset for more than it is expected to be worth - you sell at a financial loss but you feel like you're better off. If you were a company then a good deal might see the share value increase despite the loss.






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  Reply # 1441162 5-Dec-2015 22:20
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Behodar:
Jase2985: the thing is why would you be going through 6 vehicles in a year if it wasnt for some form of gain?

My work sells 10-15 vehicles each year (selling off the oldest ones to keep the pool "fresh"), but the reason for having the vehicles in the first place is for staff transport. I'd imagine that that's not a "primary purpose of gain".


i would think buisnesses are different to a single person/private trader.



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  Reply # 1441164 5-Dec-2015 22:26
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Jase2985: the thing is why would you be going through 6 vehicles in a year if it wasnt for some form of gain?

99.9% of people buy a vehicle for the long term


As I see it, its quite easy if you are an car/motorcycle enthusiast and own multiple vehicles. I can think of many people I personally know who own 6 or more vehicles. All it takes is a single event where you shed all the vehicles at once, ie divorce, cancer, disablement, redundancy, moving address.


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  Reply # 1441168 5-Dec-2015 22:58
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Geese:
Jase2985: the thing is why would you be going through 6 vehicles in a year if it wasnt for some form of gain?

99.9% of people buy a vehicle for the long term


As I see it, its quite easy if you are an car/motorcycle enthusiast and own multiple vehicles. I can think of many people I personally know who own 6 or more vehicles. All it takes is a single event where you shed all the vehicles at once, ie divorce, cancer, disablement, redundancy, moving address.



how often does it happen though? not a lot

all im saying is most people dont go through that many vehicles in a year.

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  Reply # 1441242 6-Dec-2015 08:51
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Geese: I can't find the definition of what is the meaning of "sold for the primary purpose of gain", in reference to:

Motor Vehicle Sales Act 2003

8 Who is treated as motor vehicle trader
(1) A person is treated as carrying on the business of motor vehicle trading for the purposes of this Act if—
(a)the person holds out that the person is carrying on the business of motor vehicle trading; or
(b)in any specified period, the person sells more than 6 motor vehicles, unless that person proves that those motor vehicles were not sold for the primary purpose of gain
(c)in any specified period, the person imports more than 3 motor vehicles, unless that person proves that those motor vehicles were not imported to be sold for the primary purpose of gain.

Does it mean gain = profit (making money on the sale, presumably as a car dealer would do), or does it mean gain = sell for money (even if sale is at substantial loss to cost of vehicle)?

If the legislation doesn't define the phrase or it's component parts (in this case interpretations, but not the one you seek, are defined in s6) then the normal dictionary meaning is applied, unless there is another section/subsection which contains the interpretation you are looking for.

Geese:
Jase2985: the thing is why would you be going through 6 vehicles in a year if it wasnt for some form of gain?

99.9% of people buy a vehicle for the long term


As I see it, its quite easy if you are an car/motorcycle enthusiast and own multiple vehicles. I can think of many people I personally know who own 6 or more vehicles. All it takes is a single event where you shed all the vehicles at once, ie divorce, cancer, disablement, redundancy, moving address. 

A big part of the problem with discussions like this is that you really need to be looking at the section in it's entirety and quoting it all rather than skewing things (because most people can't be bothered looking the legislation up and going through the relevant parts) by picking out one subsection. Subsection 2 is quite pertinent and in the example scenarios you give it's quite easy to prove what your primary purpose is.

Behodar:
Jase2985: the thing is why would you be going through 6 vehicles in a year if it wasnt for some form of gain?

My work sells 10-15 vehicles each year (selling off the oldest ones to keep the pool "fresh"), but the reason for having the vehicles in the first place is for staff transport. I'd imagine that that's not a "primary purpose of gain".

This is covered under s9(1)(i).



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  Reply # 1441295 6-Dec-2015 11:28
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Dratsab:A big part of the problem with discussions like this is that you really need to be looking at the section in it's entirety and quoting it all rather than skewing things (because most people can't be bothered looking the legislation up and going through the relevant parts) by picking out one subsection.


To be honest, I'm not following what your saying?




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  Reply # 1441297 6-Dec-2015 11:38
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I think I have interpreted "gain" now based on a few seemingly contradictory letters.

Gain must mean for anything in return. Because I'm informed "swaps" count as a "sale". So a straight swap involving no cash, regardless of values of vehicles involved incurs a +1, and after 6 "swaps" one is required to become a LMVD.

(I've never swapped a vehicle).

So "sold for the primary purpose of gain" must mean any transaction where you simply get anything at all in return for your vehicle. Giving a vehicle away free with no strings is the only exception.

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  Reply # 1441302 6-Dec-2015 11:48
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Geektastic: It means that the motor vehicle was purchased with the intention of making the gain.

So, if you buy a Vauxhall Astra for $3000 and drive it for a year then sell it and some fool offers you $4000, that was incidental to owning the car.

If you buy the same car, put it outside your house, on a lot or whatever and advertise it for sale immediately, you bought that car for the primary purpose of gain from a sale not use.

It is similar in concept to the definition of being in business used in tax law - your activities must be carried out "with the intention of making a profit" which accepts that you won't always actually make one.


Gain is profit, but its not about whether you made a profit, its about intention to make a profit

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  Reply # 1441306 6-Dec-2015 11:52
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Geese: I think I have interpreted "gain" now based on a few seemingly contradictory letters.

Gain must mean for anything in return. Because I'm informed "swaps" count as a "sale". So a straight swap involving no cash, regardless of values of vehicles involved incurs a +1, and after 6 "swaps" one is required to become a LMVD.

(I've never swapped a vehicle).

So "sold for the primary purpose of gain" must mean any transaction where you simply get anything at all in return for your vehicle. Giving a vehicle away free with no strings is the only exception.


A sale is a sale whether the consideration is cash, favours, other goods. Money is merely a convenient alternative to barter. How the IRD handles that, is another matter. In a set of accounts, the bartered goods would have to be assigned a value, without looking up statutes I imagine thats how it would be covered. Same as a trade in. Money or the trade in car has a value, i.e. asset , i.e. Stock



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  Reply # 1441333 6-Dec-2015 12:13
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OK, got it now.

So dumbing the act down what it is saying is that you cannot take more than 6 vehicles out of your name for any reason whatsoever in any consecutive 12 month period, unless you are giving away the excess vehicles over 6 in the 12 month period absolutely free, and can prove this.

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  Reply # 1441337 6-Dec-2015 12:30
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Jase2985: i would think buisnesses are different to a single person/private trader.

It was just intended as an example.

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