ATO Interpretative Decision
ATO ID 2001/597
Income Tax
Motor Vehicle Expenses - leased motor vehicle no longer used for work related purposesFOI status: may be released
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This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is a deduction allowable under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for lease expenses incurred by the taxpayer for a leased motor vehicle after the taxpayer has ceased using the motor vehicle for work related purposes?
Decision
No, a deduction is not allowable under section 8-1 of the ITAA 1997 for lease expenses incurred by the taxpayer for a leased motor vehicle after the taxpayer has ceased using the motor vehicle for work related purposes.
Facts
It was a condition of the taxpayer's employment that they own and maintain a motor vehicle for work purposes.
The taxpayer acquired a motor vehicle on a finance lease and made regular lease payments.
The taxpayer used the motor vehicle for work purposes until their employment conditions changed and they were no longer required to own and maintain a motor vehicle for work purposes.
The taxpayer retained the motor vehicle but no longer used it for work related purposes.
Reasons for Decision
Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature.
Although the taxpayer acquired the motor vehicle for work related purposes, the motor vehicle is no longer required to be used for that purpose. The expenses are no longer incurred in gaining or producing assessable income and are also private in nature. The taxpayer therefore cannot claim a deduction under section 8-1 of the ITAA 1997 for the lease expenses incurred after they cease using the motor vehicle for work related purposes.
Date of decision: 25 May 2001
Legislative References:
Income Tax Assessment Act 1997
section 8-1
ATO ID 2001/593
Keywords
Motor vehicle expenses
Lease and hire expenses
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 25 May 2001 | Original statement |
| 11 November 2005 | Archived |