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Taxation Determination

TD 2005/30

Income tax: what is the car limit to be used for the 2005-2006 financial year?

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FOI status:

may be released

Preamble

The number, subject heading, date of effect and paragraphs 1 to 3 of this document are a 'public ruling' for the purposes of Part IVAAA of the Taxation Administration Act 1953 and are legally binding on the Commissioner.

1. The car limit for the 2005-2006 financial year is $57,009. This limit is indexed annually in line with movements in the motor vehicle purchase sub-group of the Consumer Price Index.

2. For the 2003-2004 year this index was 415.4 and for the 2004-2005 year the index was 404.2 resulting in an indexation factor of 0.973, that is, less than 1. The law requires that where the indexation factor is less than 1, the car limit is not to be indexed.[1] As a result, the car limit remains the same as that which applied in the 2004-2005 financial year.

3. The car limit of $57,009 is used to calculate depreciation deductions under the income tax law.[2]

Example

4. On 4 July 2005 a business purchases a motor vehicle for $64,000 wholly for use in the carrying on of its business.

5. In determining the depreciation that may be claimed for the 2005-2006 financial year the business is restricted to calculating the depreciation on a cost price of $57,009.

Date of Effect

6. This Determination applies to the financial year commencing on 1 July 2005.

Commissioner of Taxation
29 June 2005

Footnotes

1 Subsection 960-270(2) of the Income Tax Assessment Act 1997 (ITAA 1997).

2 Subsection 40-230(3) of the ITAA 1997. The 'car limit' is also used to set the luxury car tax threshold and is used to determine if luxury car tax is payable - see Luxury Car Tax Determination LCTD 2005/1.

Not previously issued as a draft

References

ATO references:
NO 2004/6083

Previous Rulings/Determinations:
TD 2003/18
TD 2004/27

ISSN: 1038-8982

Related Rulings/Determinations:

LCTD 2005/1

Subject References:
car limit
depreciation

Legislative References:
TAA 1953 Pt IVAAA
ITAA 1997 40-230(3)
ITAA 1997 960-270(2)

TD 2005/30 history
  Date: Version: Change:
You are here 29 June 2005 Original ruling  
  18 May 2016 Withdrawn  

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