Taxation Determination
TD 2006/44
Income tax: what is the car limit for the 2006-2007 financial year?
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FOI status:
This Ruling provides you with the following level of protection:
This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953. A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. If you rely on this ruling, we must apply the law to you in the way set out in the ruling (or in a way that is more favourable for you if we are satisfied that the ruling is incorrect and disadvantages you, and we are not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you. |
Ruling
1. The car limit for the 2006-2007 financial year is $57,009.
Example
2. On 6 July 2006 a taxpayer purchases a motor vehicle for $65,000 wholly for use in carrying on their business. In working out the vehicle's decline in value they may deduct for the 2006-2007 income year, the first element of cost of the vehicle is reduced to $57,009.
Date of effect
3. This Determination applies for the financial year commencing on 1 July 2006.
Commissioner of Taxation
5 July 2006
Appendix 1 - Explanation
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This Appendix is provided as information to help you understand how the Commissioner's view has been reached. It does not form part of the binding public ruling.
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Explanation
4. The car limit is used to work out decline in value deductions of certain cars under the income tax law.[1]
5. The car limit is indexed annually in line with movements in the motor vehicle purchase sub-group of the Consumer Price Index.
6. For the 2004-2005 year the index was 404.2 and for the 2005-2006 year the index was 395.4, resulting in an indexation factor of 0.978: 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. [2] As a result, the car limit for the 2006-2007 financial year remains at $57,009 which applied for the 2005-2006 financial year.
Not previously issued as a draft
References
ATO references:
NO 2004/6083
Previous Rulings/Determinations:
TD 2003/18
TD 2004/27
TD 2005/30
Related Rulings/Determinations:
LCTD 2006/1
Subject References:
car limit
decline in value
Legislative References:
TAA 1953
ITAA 1997 40-230
ITAA 1997 960-270(2)
| Date: | Version: | Change: | |
| You are here | 5 July 2006 | Original ruling | |
| 18 May 2016 | Withdrawn |