# Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION

PART 2-5 - RULES ABOUT DEDUCTIBILITY OF PARTICULAR KINDS OF AMOUNTS

Division 28 - Car expenses

Subdivision 28-C - The " cents per kilometre " method

SECTION 28-25   How to calculate your deduction

28-25(1)

To calculate your deduction using the " cents per kilometre " method, use this formula:

 Number of *business kilometres travelled by the *car in the income year × Rate of cents/kilometre determined under subsection (4) for the car for the income year

28-25(2)
But you can use this formula for the first 5,000 *business kilometres only. If the *car travelled more than 5,000 business kilometres, you must discard the kilometres in excess of 5,000.

Example:

If the car travelled 5,085 business kilometres, you could claim for 5,000, and would lose the extra 85.

28-25(3)

Business kilometres are kilometres the *car travelled in the course of:

(a) producing your assessable income; or

(b) your *travel between workplaces.

You calculate the number of business kilometres by making a reasonable estimate.

28-25(4)

For the purposes of subsection (1), the Commissioner may, by legislative instrument, determine rates of cents per kilometre for cars for an income year.

28-25(5)

In determining a rate, the Commissioner must have regard to the average operating costs for the cars to be covered by that rate.
##### Note:

Examples of operating costs include fixed costs such as registration, insurance and depreciation, and variable costs such as fuel and maintenance.

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