ATO Interpretative Decision
ATO ID 2004/24 (Withdrawn)
Income Tax
Car expenses - for a car that was gifted to the taxpayerFOI status: may be released
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This ATO ID is a straight application of the law and does not contain an interpretative decision.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Withdrawn 11 November 2005
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 use one of the four methods in Division 28 of the Income Tax Assessment Act 1997 (ITAA 1997) to calculate a deduction for car expenses, in relation to a car that was given to them as a gift?
Decision
Yes. As they own the car for the purposes of Division 28 of the ITAA 1997, the taxpayer is entitled to use one of the four methods in Division 28 to calculate a deduction for car expenses, in relation to a car that was given to them as a gift.
Facts
The taxpayer incurs car expenses in relation to a car that they use for income producing purposes.
The car was given to the taxpayer as a gift; they did not purchase or contribute towards the purchase of the car.
The car is not registered in the taxpayer's name, but they are responsible for all costs associated with running and maintaining the car.
Reasons for Decision
Section 28-12 of the ITAA 1997 allows taxpayers a deduction for car expenses, using one of the four methods in Division 28 of the ITAA 1997, in relation to a car that they own or lease.
The term 'own' is not defined in income tax legislation. The word therefore bears its ordinary meaning.
The Australian Oxford Dictionary defines own as to 'have as property; possess'.
A person may own or possess property through an effective gift transaction (as the donor transfers ownership or possession of the property to the donee).
Consequently, a taxpayer may own a car as a result of a gift. In such circumstances, a taxpayer does not have to purchase or contribute towards the purchase of a car to own it for the purposes of Division 28 of the ITAA 1997. The taxpayer in this case, therefore, owns the car for the purposes of Division 28 of the ITAA 1997.
Accordingly, the taxpayer is entitled to use one of the 4 methods in Division 28 of the ITAA 1997 to calculate a deduction for car expenses, in relation to a car that was given to them as a gift.
Date of decision: 12 December 2003Year of income: 30 June 2004
Legislative References:
Income Tax Assessment Act 1997
Section 28-12
Division 28
ATO ID 2001/420
Keywords
Car expenses
ISSN: 1445-2782
| Date: | Version: | |
| 12 December 2003 | Original statement | |
| You are here → | 11 November 2005 | Archived |