Second Hand Vehicle Dealers Act 1995

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Second hand vehicle dealers information

Working in the second hand vehicle industry

Any person (including a company) who carries on business or holds himself or herself out as a second-hand vehicle dealer, must be licensed under the Second-hand Vehicle Dealers Act 1995.

  • If a business operates as a partnership then each partner must hold their own licence.
  • Persons in the business of selling second-hand motorcycles must also hold a dealers licence.
  • A private person who sells or offers for sale or buys or offers to buy a second-hand vehicle is not normally considered to be a dealer. However, a person is required to be licensed as a second-hand vehicle dealer if they are carrying on a business as a dealer.
  • A person who sells or buys second-hand vehicles as part of a profit-making system may be considered to be a dealer. If you sell or offer to sell or buy or offer to buy four or more cars during a period of twelve months, the law presumes you are a dealer and it will be up to you to prove otherwise.
  • If you and another person, who is your close associate, sell or offer to sell or buy or offer to buy, an aggregate of at least six second-hand vehicles during a period of 12 months, you and your close associate, will both be presumed to be dealers and it will be up to both of you to prove otherwise.

If you have any doubts about these issues, you should seek independent legal advice.

Licence not required

You are not required to hold a licence as a second-hand vehicle dealer if you are:

  • a credit provider (as defined by the National Consumer Credit Protection Act 2009) and your business as a dealer is incidental to your credit business
  • an auctioneer selling second-hand  vehicles on behalf of others, who does not otherwise carry on the business of buying or selling second-hand vehicles
  • the Crown.

Penalties

If you trade as a second-hand vehicle dealer without holding a licence and you are convicted by the courts you may be liable for a penalty of up to $20,000.

Guidelines for applying for a licence

You are entitled to hold a licence if you:

  • are 18 years of age or older
  • have not been suspended or disqualified from carrying on an occupation, trade or business
  • are not an undischarged bankrupt or subject to a composition, deed, or scheme of arrangement with or for the benefit of creditors
  • have not been, in the last five years, a director of a company wound up for the benefit of creditors
  • have never been convicted of an indictable offence of dishonesty
  • have not, in the last ten years, been convicted of a summary offence and are a fit and proper person.

Companies

If you intend operating the business through a company (body corporate), the company must apply for a licence.

The Act requires a licensed dealer that is a company to ensure that the dealer’s business is properly managed and supervised by a licensed dealer who is a natural person. This person must be nominated on the licence application in addition to director details.

Your company is entitled to hold a licence if:

  • it has not been suspended or disqualified from carrying on an occupation, trade or business
  • it is not being wound up and is not under official management or receivership
  • each director has not been, in the last five years, a director of a company wound up for the benefit of creditors
  • each director has not been suspended or disqualified from carrying on an occupation, trade or business
  • each director has never been convicted of an indictable offence of dishonesty
  • have not, in the last ten years, been convicted of a summary offence and each director is a fit and proper person.

If the Commissioner for Consumer Affairs refuses your licence you can appeal to the District Court within one month from the date of refusal.

Obligations of a second hand vehicle dealer

Registration of premises

You cannot carry on business as a licensed dealer without first registering your business premises with the Commissioner, who must be satisfied that the premises is suitable. You:

  • Can apply to register your premises upon application for a licence. However, if you make a separate application to have your premises approved at a later date, a fee will apply.
  • Must supply a copy of the Council’s letter approving the premises as a suitable place to sell second-hand motor vehicles.

Compensation fund

The Second-hand Vehicles Compensation Fund (the Fund) is administered by the Commissioner for Consumer Affairs and has been set up to protect the consumer should a dealer default on their obligations.

  • All licensed dealers are required to pay a contribution to the Fund each year when they renew their licence.
  • If you do not pay this contribution your licence is suspended until such time the payment is made.
  • A fee is required to be paid by the licensee for each registered premises. In the case of partnerships, only one member of the partnership is required to pay the fee into the fund.

Rights and responsibilities of second hand vehicle dealer

New laws commenced on 29 November 2010 which change the way second-hand vehicle dealers do business with South Australian consumers.

The Second-hand Vehicle Dealers (Cooling-off Rights) Amendment Act 2009 amends the Second-hand Vehicle Dealers Act 1995Read more about your cooling off rights.

Key features of the legislation:

  • the introduction of a negative licensing scheme for salespersons
  • changes to the definition of dealers
  • addition of airbags to a dealer’s statutory duty to repair
  • changes to forms.

Negative licensing

Dealers must check that there are no disqualifying factors (such as criminal convictions) for the salespeople they employ. A person must not act or be employed by a dealer as a salesperson if they:

  • have been convicted of an indictable offence of dishonesty; or
  • have been convicted of a summary offence of dishonesty during the last 10 years; or
  • is suspended or disqualified from practising or carrying on an occupation, trade or business under a law of a State or Territory or Commonwealth.

It is an offence for both the dealer and the salesperson.

The prohibition of employing or acting as a salesperson will not apply to a salesperson already employed or acting before 29 November 2010 unless the salesperson is convicted, disqualified or suspended after that date.

A salesperson may be subject to disciplinary action if they have acted unlawfully, improperly, negligently or unfairly.

Changes to backyard selling

From November 29, 2010 a person will be presumed to be a dealer if he or she buys or offers to buy or sells or offers for sale, at least four second-hand vehicles during a period of 12 months (unless they can demonstrate the vehicles were bought or sold for private purposes).

Under the changes to the law, a person and a close associate are presumed to be dealers, if between them, they buy or offer to buy or sell or offer for sale, six or more second-hand vehicles during a 12 month period (unless they can demonstrate the vehicles were bought or sold for private purposes).

If a vehicle’s registration is transferred from one person to another, it is presumed that the vehicle was sold, unless it can be proved to the contrary.

Duty to repair

According to the law, a dealer has a statutory duty to repair defects present in the vehicle or that appear in the vehicle after the sale. Though some accessories are exempt from this requirement, airbags (supplementary restraint systems) are no longer exempt.

Forms

There are minor changes to all currently existing forms. View the amended forms.

There is a new form for purchasers to waive their cooling off rights. This form must be witnessed by a person other than the dealer or a salesperson involved in any way in the sale.

Four Commissioner approved forms.

  1. Legal title to vehicle during cooling-off period (PDF 32KB)
  2. Details of condition of trade-in vehicle (PDF 26KB)
  3. Rescission of contract by dealer (PDF 26KB)
  4. Option to purchase vehicle subject to contract for sale (PDF 30KB)

ALL CHANGES COMMENCED ON 29 NOVEMBER 2010

View the video that outlines the obligations and responsibilities of second-hand vehicle dealers. Responsibilities of second-hand Vehicle Dealers (keyboard control version)

More information

Fees for second hand vehicle dealers

Fees effective 1 July 2014

Note: Unless specified the following fees are Goods and Services Tax (GST) free and therefore a tax invoice will not be issued.

Application and Pre-Grant Fees

Application Fee Pre-Grant Fee Total
Body Corporate – motor vehicle & motor cycle $258.00 $595.00 $853.00
Plus     Compensation fund per premises $350.00 $350.00
Individual licence – motor vehicle & motor cycle $258.00 $396.00 $654.00
Plus     Compensation fund per premises $350.00 $350.00
Body Corporate – motor cycle only $258.00 $189.00 $447.00
Plus     Compensation fund per premises $100.00 $100.00
Individual licence – motor cycle only $258.00 $276.00 $531.00
plus     Compensation fund per premises $100.00 $100.00
Amending licence conditions
Application to change premises $49.00 $49.00
Application for additional premises $49.00 $49.00

Periodic Fees

Body Corporate- motor vehicle & motor cycle $491.00
            Plus     Compensation fund per premises $350.00
Individual licence- motor vehicle & motor cycle $345.00
Plus     Compensation fund per premises $350.00
Body Corporate - motor cycle only $276.00
Plus     Compensation fund per premises $100.00
Individual licence- motor cycle only $189.00
Plus     Compensation fund per premises $100.00

 Other Fees

Default penalty for periodic returns $163.00
Replacement of licence card or certificate $25.00