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

Where an expense payment fringe benefit is provided 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 9.4). 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 only substantiated by the use of employee declarations.

For full details about applying the otherwise deductible rule and the Employee's car declaration, refer to Employee cars - applying the 'otherwise deductible' rule.



The employee declaration referred to in section 9.5 is not suitable for an expense incurred in relation to a car.

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    Last modified: 20 Jan 2014QC 17823