ATO Interpretative Decision
ATO ID 2001/419
Income Tax
Car Expenses - cents per kilometre method - more than one income earning activityFOI 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 the taxpayer entitled to claim a deduction for car expenses using the cents per kilometre method for 1500 kilometres work related travel and 5000 kilometres for business travel under section 28-12 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No, the taxpayer is not entitled to claim a deduction for car expenses using the cents per kilometre method for 1500 kilometres work related travel and 5000 kilometres for business travel under section 28-12 of the ITAA 1997, but can claim a deduction for the first 5000 kilometres only.
Facts
The taxpayer used the same car for employment related travel and travel in relation to their own business.
The taxpayer travelled 1500 kilometres in the course of their employment and 5000
kilometres in the course of carrying on their business.
Reasons for decision
Section 28-12 of the ITAA 1997 provides that a deduction for car expenses can be made by using one of 4 methods. The cents per kilometre method is contained in Subdivision 28-C of the ITAA 1997.
In calculating the amount of the deduction under section 28-25 of the ITAA 1997, the number of business kilometres is limited to the first 5000. Any business kilometres travelled in excess of 5000 is disregarded. Business kilometres are kilometres that are travelled in the course of producing assessable income. No distinction is made between different sources of income which make up a taxpayer's assessable income.
The maximum number of kilometres the taxpayer can use to claim a deduction using the cents per kilometre method is therefore 5000 kilometres.
Date of decision: 21 June 2001
Legislative References:
Income Tax Assessment Act 1997
section 28-12
Subdivision 28-C
section 28-25
Keywords
Motor vehicle expenses
Deductions and expenses
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 21 June 2001 | Original statement |
| 11 November 2005 | Archived |