ATO Interpretative Decision
ATO ID 2001/420 (Withdrawn)
Income Tax
Car Expenses - taxpayer does not own or lease the motor vehicleFOI 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.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 under section 28-12 of the Income Tax Assessment Act 1997 (ITAA 1997) for car expenses using the cents per kilometre method when they do not own or lease the car?
Decision
No, the taxpayer is not entitled to claim a deduction under section 28-12 of the ITAA 1997 for car expenses using the cents per kilometre method when they do not own or lease the car.
Facts
The taxpayer incurred car expenses for the purposes of earning assessable income.
The taxpayer does not own or lease the car and the taxpayer did not contribute financially to its initial purchase.
Reasons for Decision
Section 28-12 of the ITAA 1997 provides that a deduction for car expenses can be made using one of 4 methods if the taxpayer owned or leased a car or hired a car under a hire purchase agreement.
Normally a car will be registered in the name of its owner. However, a taxpayer may be considered to be the owner or lessee of a car where a family or private arrangement makes them the owner or lessee even though they are not the registered owner.
A taxpayer can prove ownership of the car by demonstrating their financial contributions to any of the following:
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- The initial purchase of the car
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- Lease payments
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- Hire purchase agreements; or
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- Loan payments.
A taxpayer may not be considered to own or lease the car if they do not contribute to the payment of one of the above, even though the taxpayer pays for expenses such as registration, insurance, maintenance or other running costs. This does not prevent the taxpayer from claiming a deduction for the expenses they pay, but they cannot use one of the four car expenses methods in doing so.
As the taxpayer did not contribute financially to the purchase, lease, hire purchase or loan payments on the car, they are not considered to own or lease the car and accordingly cannot claim their car expenses using the cents per kilometre method.
Date of decision: 21 June 2001
Legislative References:
Income Tax Assessment Act 1997
section 28-12
Keywords
Motor vehicle expenses
Deductions and expenses
ISSN: 1445-2782
| Date: | Version: | |
| 21 June 2001 | Original statement | |
| You are here | 11 November 2005 | Archived |
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