18.9 Reduction in taxable value where an expense that would have been deductible to the employee is incurred in relation to a car

Where you provide a residual benefit in relation to a car owned or leased by the employee, there are special rules for determining how much (if any) of your expenditure would have been 'otherwise deductible' to the employee.

These special rules are actually three different methods of calculating the amount of the expense that hypothetically would have been income tax deductible to the employee (that is, step 2 in the four-step procedure explained in section 18.7). The differences arise from the extent to which the car is used for business or employment-related purposes, and/or the type of evidence available to substantiate that use.

The first method is substantiated by means of log book records and/or odometer records. The second and third methods are substantiated by an employee declaration only. For full details and the appropriate declaration, refer to Employee cars - applying the 'otherwise deductible' rule. The employee declaration shown in section 18.8 is not suitable for an expense incurred in relation to a car.

    Last modified: 15 Apr 2015QC 17817