ATO Interpretative Decision

ATO ID 2002/340 (Withdrawn)

Income Tax

Deductibility of car expenses incurred in maintaining rental properties using the cents per kilometre method
FOI status: may be released

The ATO View on the deductibility of car expenses incurred by a landlord is contained in the annual Tax Office publication 'Rental Properties'.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 a deduction for car expenses incurred in maintaining an investment property using the cents per kilometre method under section 28-12 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

Yes. The taxpayer is entitled to a deduction for car expenses incurred in maintaining an investment property using the cents per kilometre method under section 28-12 of the ITAA 1997.

Facts

The taxpayer owns investment properties.

The taxpayer owns the car they use to travel to the investment properties.

They have a managing agent to collect rent and lease the properties. The managing agent is instructed to contact the taxpayer if a problem arises with the maintenance of the property. The taxpayer then inspects the property to determine whether they can fix the problem before consulting a professional.

A reasonable estimate of the taxpayer's travel to inspect and maintain the investment properties is less than 5000 km in the income year.

Reasons for Decision

Section 28-12 of the ITAA 1997 allows a deduction for car expenses using one of the four methods under Division 28 of the ITAA 1997. The subdivisions then prescribe how to calculate the deduction referrable to each method.

Subdivision 28-C of the ITAA 1997 sets out how to calculate a car expense claim using the cents per kilometre method. It is based on the number of business kilometres travelled in the income year.

'Business kilometres' is defined in subsection 28-25(3) of the ITAA 1997 as the kilometres the car travelled in producing the taxpayer's assessable income. The business kilometres travelled can be calculated by making a reasonable estimate.

Under subsection 28-25(2) of the ITAA 1997 this method can only be used if the taxpayer travels five thousand business kilometres or less or restricts the claim to five thousand business kilometres or less in the income year.

The taxpayer's travel to maintain and inspect the investment properties they own has been incurred in connection with gaining income from these investment properties and is therefore considered to be business kilometres travelled.

The taxpayer's reasonable estimate of business kilometres travelled is less than five thousand in the income year.

Therefore, the taxpayer would be entitled to a deduction for the travel to maintain and inspect the investment properties using the cents per kilometre method under section 28-12 of the ITAA 1997.

Date of decision: 25 January 2001

Year of income: Year ended 30 June 2001

Legislative References:
Income Tax Assessment Act 1997
   Division 28
   Subdivision 28-C
   section 28-12
   subsection 28-25(2)
   subsection 28-25(3)

Keywords
Rental expenses
Travel expenses
Rental property
Motor vehicle expenses

Business Line: Small Business/Individual Taxpayers

Date of publication: 28 March 2002

ISSN: 1445-2782

history

	Date:	Version:
	25 January 2001	Original statement
You are here	15 May 2009	Archived

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