INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision F - Substantiation of certain expenses of years of income up to and including 1993-94  

SECTION 82KT   INTERPRETATION  

82KT(1)   [Definitions]  

In this Subdivision, unless the contrary intention appears:

applicable log book period
, in relation to a car held by a taxpayer during a period (in this definition called the holding period ) in a year of income, means:


(a) if the holding period is a period of less than 12 weeks - the holding period;


(b) if the holding period is a period of not less than 12 weeks and there is a continuous period (in this paragraph called a concurrent holding period ) of not less than 12 weeks in the year of income during which the taxpayer held both:


(i) the car; and

(ii) one or more other log book cars;
a continuous period of not less than 12 weeks that:

(iii) begins and ends:

(A) if there is a continuous period (in this sub-subparagraph called the sole holding period ) of not less than 12 weeks in the year of income during which the taxpayer held the car and no other log book cars and the sole holding period commenced after the end of the concurrent holding period or, if there are 2 or more concurrent holding periods, the last of those concurrent holding periods - during the sole holding period; and

(B) in any other case - during the concurrent holding period or, if there are 2 or more concurrent holding periods, during the last of those concurrent holding periods;

(iv) in a case to which sub-subparagraph (iii)(B) applies - is the same as the applicable log book period for the other log book car, or each of the other log book cars, so held during the concurrent holding period concerned; and

(v) in all cases - is specified by the taxpayer in the taxpayer's car records for the year of income; or


(c) in any other case - a continuous period of not less than 12 weeks that:


(i) begins and ends during the holding period; and

(ii) is specified by the taxpayer in the taxpayer's car records for the year of income.

car
means a motor vehicle, being:


(a) a motor car, station wagon, panel van, utility truck or similar vehicle; or


(b) any other road vehicle designed to carry a load of less than 1 tonne or fewer than 9 passengers;

but does not include:


(c) a motor cycle or similar vehicle;


(d) a taxi taken on hire; or


(e) a motor vehicle taken on hire under an agreement of a kind ordinarily entered into by persons taking motor vehicles on hire intermittently as occasion requires on an hourly, daily, weekly or other short-term basis unless the motor vehicle has been or may reasonably be expected to be taken on hire under successive agreements of a kind that result in substantial continuity of the taking of the motor vehicle on hire.

car expense
means an outgoing incurred in connection with a car and, without limiting the generality of the foregoing, includes:


(a) an outgoing incurred in connection with the operation of a car;


(b) expenditure incurred in connection with borrowing money for the purpose of acquiring a car;


(c) expenditure (other than a payment of principal or interest) incurred in connection with the discharge of a mortgage given as security for:


(i) the repayment of money borrowed for the purpose of acquiring a car; or

(ii) the payment of the whole or a part of the cost of acquiring a car;


(d) in a case where a car is leased:


(i) expenditure incurred by the lessee in connection with the lease; and

(ii) without limiting the generality of subparagraph (i), expenditure incurred by the lessee for the preparation, registration and stamping of the lease, or of an assignment or surrender of the lease;


(e) a payment of interest on money borrowed for the purpose of acquiring a car or on the outstanding balance of the cost of acquiring a car;


(f) expenditure incurred for repairs to a car; and


(g) depreciation in respect of a car,

but does not include -


(h) such an outgoing incurred, such expenditure incurred, or such a payment made, in respect of travel outside Australia; or


(j) a taxi fare or similar expense.

car expense reimbursement payment
means a payment by way of a reimbursement to which paragraph 26(eaa) applies, being a reimbursement that:


(a) is in respect of the whole part of a car expense; and


(b) is paid by an employer to an employee in respect of travel by the employee in the course of performing duties as an employee of the employer.

car records
, in relation to a taxpayer in relation to a year of income, means records that are maintained by the taxpayer in relation to the year of income for the purposes of the provisions of this Subdivision that refer to car records and that:


(a) in the case of the year of income commencing on 1 July 1988 or an earlier year of income - are in writing in the English language or are in a form that enables them to be readily accessible and convertible into writing in the English language; or


(b) in the case of a later year of income - are maintained in a form approved by the Commissioner.

depreciation
means depreciation that is, or would but for this Subdivision be, allowable under this Act.

elect
means elect in accordance with this Subdivision.

eligible expense
means:


(a) in relation to a meal allowance - an outgoing incurred, by a taxpayer to whom the allowance was paid or is payable, in respect of the purchase of food or drink to which the allowance relates;


(b) in relation to a travel allowance - an outgoing incurred, by a taxpayer to whom the allowance was paid or is payable, in respect of the travel to which the allowance relates, being an outgoing in respect of accommodation, in respect of the purchase of food or drink, or in respect of expenditure incidental to the travel; or


(c) in relation to an eligible transport payment - a transport expense to the extent that it is related to the eligible transport payment, being an expense that was incurred by a taxpayer to whom the eligible transport payment was paid or is payable.

"eligible relative"
(Omitted by No 135 of 1990)

eligible transport payment
means a payment (in this definition called the current payment ) in respect of which all of the following conditions are satisfied:


(a) the current payment is a transport allowance payment, or a car expense reimbursement payment, paid in respect of particular travel (in this definition called the current travel ) of an employee;


(b) the current payment was paid under an industrial instrument that was in force on 29 October 1986;


(c) the aggregate of:


(i) the current payment; and

(ii) any other transport allowance payments or car expense reimbursement payments, as the case may be, payable under the industrial instrument in respect of the current travel;
does not exceed the total amount of transport allowance payments or car expense reimbursement payments, as the case may be, that would have been payable in respect of the current travel under the industrial instrument if no alterations had been made to the industrial instrument after 29 October 1986;


(d) if the aggregate of:


(i) the current payment; and

(ii) any other transport allowance payments or car expense reimbursement payments, as the case may be, payable under the industrial instrument in respect of the current travel;
exceeds the total amount of transport allowance payments or car expense reimbursement payments, as the case may be, that would have been payable in respect of the current travel if the amounts had been determined at the rates applicable on 29 October 1986 - the whole of the excess is attributable to increases determined solely by reference to matters contained in the industrial instrument on 29 October 1986.

employee
means an employee as defined in section 221A .

employer
means an employer as defined in section 221A .

employment-related expense
means an outgoing incurred by a taxpayer in producing salary or wages of the taxpayer, and, without limiting the generality of the foregoing, includes:


(a) in a case where, during a year of income, a taxpayer:


(i) incurred an outgoing by way of a periodical subscription to a trade, business or professional association; and

(ii) derived salary or wages;
that outgoing;


(b) expenditure incurred by a taxpayer in connection with borrowing money used by the taxpayer wholly or partly for the purpose of producing salary or wages of the taxpayer;


(c) expenditure (other than a payment of principal or interest) incurred by a taxpayer in connection with the discharge of a mortgage given by the taxpayer as security for:


(i) the repayment of money borrowed by the taxpayer; or

(ii) the payment by the taxpayer of the whole or a part of the purchase price of property purchased by the taxpayer;
where that money or property was used by the taxpayer wholly or partly for the purpose of producing salary or wages of the taxpayer;


(d) in a case where property leased to a taxpayer was used by the taxpayer wholly or partly for the purpose of producing salary or wages of the taxpayer:


(i) expenditure incurred by the taxpayer in connection with the lease; and

(ii) without limiting the generality of subparagraph (i), expenditure incurred by the taxpayer for the preparation, registration and stamping of the lease, or of an assignment or surrender of the lease;


(e) a payment of interest on money borrowed by a taxpayer where that money was used by the taxpayer wholly or partly for the purpose of producing salary or wages of the taxpayer;


(f) expenditure incurred by a taxpayer for repairs to any premises, or part of premises, plant, machinery, implements, utensils, or articles held, occupied or used by the taxpayer wholly or partly for the purpose of producing salary or wages of the taxpayer;


(g) depreciation in respect of property owned by a taxpayer and:


(i) used by the taxpayer; or

(ii) installed ready for use;
wholly or partly for the purpose of producing salary or wages of the taxpayer; and


(h) expenditure incurred by a taxpayer in respect of which a deduction is, or would but for this Subdivision be, allowable under section 74 or 74A ,

but does not include a car expense, a travel expense or an eligible expense in relation to a meal allowance or in relation to a travel allowance.

exclusive business use deduction
, in relation to a car expense incurred by a taxpayer in a year of income in relation to a car held by the taxpayer during a period (in this definition called the holding period ) in the year of income, means the deduction that, apart from this Subdivision, would have been allowable to the taxpayer under this Act in respect of the car expense if all use of the car by the taxpayer during the holding period had been exclusively in the course of producing assessable income of the taxpayer.

expense
means:


(a) a car expense, an employment-related expense, or a travel expense, incurred by a taxpayer; or


(b) an eligible expense incurred by a taxpayer in relation to a meal allowance or in relation to a travel allowance.

industrial instrument
means a law of the Commonwealth or of a State or Territory or an award, order, determination or industrial agreement in force under any such law.

log book car
, in relation to a taxpayer, in relation to a year of income, means a car held by the taxpayer during a period (in this definition called the holding period ) in the year of income where:


(a) the car was used, at any time during the holding period, in the course of producing assessable income of the taxpayer; and


(b) the taxpayer did not elect that subsection 82KW(2) or (3) or 82KX (1) apply in relation to the car in relation to the year of income.

log book records
, in relation to a car held by a taxpayer, in relation to a period, means a daily log book or similar document in which, in respect of each journey:


(a) that is undertaken in the car during the period in the course of producing assessable income of the taxpayer; and


(b) that the taxpayer, or a person acting on behalf of the taxpayer, chooses to record in the document for the purposes of demonstrating the pattern of use of the car during the period;

an entry setting out particulars of:


(c) the date on which the journey began and the date on which it ended;


(d) the respective odometer readings of the car at the beginning and end of the journey;


(e) the number of kilometres travelled by the car in the course of the journey;


(f) the purpose or purposes of the journey;


(g) the name of the person, or the names of the persons, driving the car on that journey;


(h) the date on which the entry is made; and


(j) the name of the person by whom the entry is made;

is made in the English language at, or as soon as reasonably practicable after, the end of the journey, and that, in relation to each such entry so made, is signed, at the time when the entry is made, by the person who made the entry.

long-term log book car
, in relation to a taxpayer, in relation to a year of income, means a log book car in relation to the taxpayer in relation to the year of income other than a car while it is held by the taxpayer pending its replacement, for use in the course of producing assessable income of the taxpayer, by another car.

low business kilometre car
, in relation to a taxpayer, in relation to a year of income, means a car held by the taxpayer during a period (in this definition called the ``holding period'') in the year of income where the number calculated in accordance with the formula:


BK   ×     DY    
  DHP

where:

DHP is the number of days in the holding period;

DY is the number of days in the year of income; and

BK is the number of whole kilometres travelled by the car during the holding period in the course of producing assessable income of the taxpayer;

does not exceed 5,000.

meal allowance
means an allowance paid or payable to an employee for the purpose of enabling the employee to purchase food and drink, but does not include any part of a travel allowance.

motor vehicle
includes a vehicle known as a four wheel drive vehicle.

nominated business percentage
, in relation to a car held by a taxpayer during a period (in this definition called the holding period ) in a year of income, means a percentage that represents an estimate made by the taxpayer of the underlying business percentage applicable to the car in relation to the taxpayer for the holding period, having regard to all relevant matters including, but without limiting the generality of the foregoing:


(a) any log book records, odometer records or other records maintained by or on behalf of the taxpayer; and


(b) any variations in the pattern of use of the car.

odometer records
, in relation to a motor vehicle, in relation to a period, means a document:


(a) in which particulars of:


(i) the odometer reading of the motor vehicle at the commencement of the period or, if the first use of the motor vehicle in the course of producing assessable income of the taxpayer occurred during the period, at the commencement of that use;

(ii) the odometer reading of the motor vehicle at the end of the period or, if the last use of the motor vehicle in the course of producing assessable income of the taxpayer occurred during the period, at the end of that use;

(iii) if paragraph 82KTJ(1)(b) applies with effect from a particular date - the odometer readings of both the replacement car and of the original car referred to in that paragraph, as at that date;

(iv) the respective dates on which the entries are made; and

(v) the name of the person, or the names of the respective persons, by whom the entries are made;
are entered in the English language, and that is signed by the person or persons referred to in subparagraph (v), at, or as soon as reasonably practicable after, the respective times to which those odometer readings relate; and


(b) in which particulars of the make, model and, if the motor vehicle has an internal combustion engine, the engine capacity (expressed in cubic centimetres) of the motor vehicle or, if paragraph 82KTJ(1)(b) applies, of both the replacement car and the original car referred to in that paragraph, are entered in the English language.

outgoing
includes a loss.

overtime meal allowance
means a meal allowance paid or payable to an employee, pursuant to the provisions of an industrial instrument, for the purpose of enabling the employee to purchase food and drink in connection with overtime worked by the employee.

person
includes a partnership.

"relevant car documents"
(Omitted by No 62 of 1987)

"rental log book car"
(Omitted by No 11 of 1989)

retention period
, in relation to an expense incurred by a taxpayer during a year of income, means the period that:


(a) commences on:


(i) in the case of an expense:

(A) that is in respect of fuel or oil and that was incurred in respect of a motor vehicle when owned or leased by the taxpayer at a time during the year of income; and

(B) where documentary evidence of the expense was not obtained by or on behalf of the taxpayer;
whichever of the following times is applicable:

(C) if the taxpayer elects that subsection 82KW(2) apply in relation to the motor vehicle in relation to the year of income - the commencement of the holding period within the meaning of that subsection or, if the first use of the motor vehicle in the course of producing assessable income of the taxpayer occurred during that holding period, the commencement of that use;

(D) in any other case - the commencement of the holding period within the meaning of section 82KUA or of the period referred to in subparagraph 82KZ(1)(c)(i) or, if the first use of the motor vehicle in the course of producing assessable income of the taxpayer occurred during that holding period or period, the commencement of that use; or

(ii) in any other case - the day on which documentary evidence of the expense was obtained by or on behalf of the taxpayer; and


(b) ends:


(i) in a case to which subparagraph (ii) does not apply - at the end of the period of:

(A) if the expense is a car expense and, at any time during the year of income, the car to which the expense relates is used in the course of producing assessable income of the taxpayer, not being salary or wages - 7 years;

(B) if the expense is a travel expense and, while undertaking the travel to which the expense relates, the taxpayer engages in an activity in the course of producing assessable income of the taxpayer, not being salary or wages - 7 years; or

(C) in any other case - 3 years and 6 months;
that commences on the day on which the taxpayer lodges a return of income of the taxpayer of the year of income; or

(ii) if, at the end of that period of 7 years, or 3 years and 6 months, as the case may be, an objection, or a request for amendment of an assessment (not being an objection), relating to the expense or to matters including the expense, or a review or appeal arising out of such an objection, has not been determined or otherwise finally disposed of - on the day on which the objection (and any review or appeal arising out of it), the request, or the review or appeal (and any appeal or further appeal arising out of it), as the case may be, has or have been determined or so disposed of.

salary or wages
means assessable income, being salary or wages as defined by section 221A .

substantiation sections
means sections 82KUA , 82KUB , 82KUC , 82KUD , 82KW (other than subsection (3)), 82KZ and 82KZA .

taxpayer
does not include a company or a person in the capacity of a trustee.

transport allowance payment
means:


(a) a payment by way of an allowance paid or payable by an employer to an employee for the sole purpose of enabling the employee to incur transport expenses in respect of travel in the course of performing duties as an employee of the employer; or


(b) so much of a payment by way of an allowance paid or payable by an employer to an employee for the principal purpose of enabling the employee to incur such expenses as is paid or payable for that purpose;

but does not include any part of any payment by way of a travel allowance.

transport expense
means an outgoing incurred in connection with transport and includes depreciation in respect of property used in connection with transport, but does not include an outgoing in respect of accommodation, in respect of the purchase of food or drink or in respect of expenditure incidental to transport.

travel allowance
means an allowance paid by an employer to an employee for the purpose of enabling the employee to incur, in respect of travel away from the employee's ordinary place of residence undertaken in the course of performing duties as an employee of the employer, outgoings in respect of accommodation, in respect of the purchase of food and drink, and in respect of expenditure incidental to the travel.

travel diary
in relation to particular travel undertaken by a taxpayer, means a diary or similar document in which the taxpayer has made, as mentioned in subsection 82KZ(2) , entries relating to activities engaged in by the taxpayer while undertaking the travel.

travel expense
means an outgoing incurred by a person in respect of:


(a) travel by the person outside Australia; or


(b) travel by the person within Australia that involves the person being away from the person's ordinary place of residence for a continuous period including more than 5 nights;

but does not include a car expense or an eligible expense in relation to a travel allowance.

underlying business percentage
, in relation to a car held by a taxpayer during a period (in this definition called the holding period ) in a year of income, means the percentage calculated in accordance with the formula:


100   × BK
TK

where:

BK is the number of whole kilometres travelled by the car during the holding period in the course of producing assessable income of the taxpayer; and

TK is the number of whole kilometres travelled by the car during the holding period.

82KT(1A)   [``Eligible transport payment'' - interpretation]  

For the purposes of the definition of eligible transport payment in subsection (1):


(a) where an industrial instrument (in this paragraph called the substituted instrument ) has come into force in substitution for another industrial instrument (in this paragraph called the original instrument ), the substituted instrument shall be taken to be a continuation of the original instrument;


(b) alterations made to an industrial instrument after 29 October 1986 shall be taken to have been made on 29 October 1986 if:


(i) the alterations were made pursuant to an application made on or before 29 October 1986 that sought increases in transport allowance payments or car expense reimbursement payments; and

(ii) if the application was amended after 29 October 1986 - the alterations made to the industrial instrument did not result in increases in transport allowance payments or car expense reimbursement payments that were greater than increases in those payments sought by the application as at 29 October 1986;


(c) where, as a result of alterations after 29 October 1986 to an industrial instrument (not being alterations that are deemed by paragraph (b) to have been made on 29 October 1986), an additional amount is paid to an employee under the instrument as a car expense reimbursement payment in respect of travel undertaken before the date on which the alterations were made:


(i) the additional amount is not an eligible transport payment; and

(ii) the question of whether any other car expense reimbursement payment in respect of that travel, or any transport allowance payment in respect of that travel, is an eligible transport payment shall be determined as if the additional amount had not been paid or payable in respect of the travel; and


(d) where, as a result of alterations after 29 October 1986 to an industrial instrument (not being alterations that are taken by paragraph (b) to have been made on 29 October 1986), an additional amount is paid to an employee under the instrument as a transport allowance payment in respect of travel:


(i) the additional amount is not an eligible transport payment; and

(ii) the question of whether any other transport allowance payment in respect of that travel, or any car expense reimbursement payment in respect of that travel, is an eligible transport payment shall be determined as if the additional amount had not been paid or payable in respect of the travel.

82KT(2)   [2 or more car journeys per day]  

For the purposes of this Subdivision, where:


(a) during a particular period during a day, 2 or more journeys are undertaken in a car; and


(b) each of the journeys undertaken in the car during that period is undertaken in the course of producing assessable income of a particular taxpayer;

the journeys referred to in paragraph (b) shall be deemed to constitute a single journey.

82KT(3)   [Time depreciation expenses incurred]  

For the purposes of this Subdivision, where a car expense, an employment-related expense or a transport expense is constituted by depreciation of property, being depreciation that is, or would but for this Subdivision be, an allowable deduction to a taxpayer in respect of a particular year of income, the expense shall be taken to be incurred by the taxpayer on the last day of the year of income.

82KT(4)   [Production of assessable income]  

Except so far as the contrary intention appears, a reference in this Subdivision to producing assessable income, or assessable income of a particular kind, includes a reference to:


(a) gaining assessable income, or assessable income of that kind, as the case may be; or


(b) except in the case of salary or wages - carrying on a business for the purpose of gaining or producing assessable income, or assessable income of that kind, as the case may be.

82KT(5)   [Business of a particular kind]  

A reference in this Subdivision to a business of a particular kind that is carried on by a person includes a reference to a business of that kind that is carried on by the person as part of, or in conjunction with, any other business.

82KT(5A)   [Application of s 82KUD]  

A reference in this Subdivision to section 82KUD being applied includes a reference to that section being applied by virtue of subparagraph 82KZBA(1)(e)(iii) .

82KT(6)   [Declaration as to application of section]  

For the avoidance of doubt, it is declared that:


(a) nothing in this Subdivision shall be taken by implication to affect the interpretation or application of this Act as in force at any time before the commencement of this Subdivision; and


(b) nothing in this Subdivision (other than section 82KUD and paragraphs 82KW(2)(a) and (3)(a) and (b) and 82KX(1)(a)) entitles a taxpayer to a deduction to which the taxpayer would not have been entitled if this Subdivision had not been enacted.


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