INCOME TAX ASSESSMENT ACT 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE  

Division 40 - Capital allowances  

Subdivision 40-D - Balancing adjustments  

Operative provisions

SECTION 40-370   Balancing adjustments where there has been use of different car expense methods  

40-370(1)  
An amount is included in your assessable income or you can deduct an amount under this section instead of section 40-285 if:


(a) a *balancing adjustment event occurs for a *car you *held; and


(b) you have deducted or can deduct an amount for the decline in value of the car for an income year under this Division; and


(c) you chose the " cents per kilometre " method in Subdivision 28-C for deducting your car expenses for the car for one or more other income years.

Note 1:

This means if you have only used the " log book " method since you began using the car, you calculate the assessable amount or deductible amount under section 40-285 .

Note 2:

Also, if you have only used the " cents per kilometre " method since you began using the car, no amount is assessable or deductible under this section or section 40-285 .

40-370(2)  
Work out the amount you include in your assessable income or the amount you can deduct in this way: Method statement


Step 1.

Subtract the *car ' s *adjustable value just before the *balancing adjustment event occurred from the car ' s *termination value.


Step 2.

Reduce the step 1 amount by the part of the *car ' s decline in value that is attributable to your using the car, or having it *installed ready for use, for purposes other than *taxable purposes. You do this by applying the formula in subsection 40-290(2) .


Step 3.

Multiply the step 2 amount by the total number of days for which you deducted the decline in value of the *car under this Division.


Step 4.

Divide the step 3 amount by the total number of days you *held the *car.


Step 5.

The step 4 amount is a deduction if it is negative or it is included in your assessable income if it is positive.

40-370(3)  


In working out the *adjustable value for the income years for which you chose the " cents per kilometre method " , assume the decline in value was calculated under this Division on the same basis as those income years when that method did not apply.

40-370(4)  


In working out the reduction in step 2 for the income years for which you chose the " cents per kilometre method " , assume that:


(a) you had not chosen that method for the *car; and


(b) Division 28 (about car expenses) had not applied to the car; and


(c) 20% was the extent of your use of the car for *taxable purposes.


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