ATO Interpretative Decision
ATO ID 2002/399 (Withdrawn)
Income Tax
Deductibility of car expenses incurred in maintaining investment properties using the 12 per cent of 'original value' methodFOI 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Status of this decision: Decision Withdrawn 11 November 2005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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 a deduction for car expenses incurred in maintaining and inspecting an investment property using the '12% of original value method' under section 28-12 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No. The taxpayer is not entitled to a deduction for car expenses incurred in maintaining and inspecting an investment property using the '12% of original value 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 the rent and lease the properties. The managing agents are instructed to contact the taxpayer if a problem arises. 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.
Subdivision 28-C of the ITAA 1997 sets out how to calculate a car expenses claim using the 12% of 'original value' method.
Subsection 28-50(1) of the ITAA 1997 states that this method can only be used if the taxpayer travels more than 5000 business kilometres or would have if the car either ceased to be used or was first used in the income year.
'Business kilometres' is defined in subsection 28-50(2) 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.
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.
However, the taxpayer's reasonable estimate of business kilometres travelled is less than 5000 kilometres in the income year. Consequently, the taxpayer would not be entitled to a deduction for the car expenses using the '12% of original value' method under section 28-12 of the ITAA 1997.
Date of decision: 25 January 2001Year of income: Year ended 30 June 2001
Legislative References:
Income Tax Assessment Act 1997
Division 28
section 28-12
Subdivision 28-C
subsection 28-50(1)
subsection 28-50(2)
ATO ID 2002/340
Keywords
Rental expenses
Travel expenses
Rental property
Motor vehicle expenses
ISSN: 1445-2782
| Date: | Version: | |
| 25 January 2001 | Original statement | |
| You are here → | 11 November 2005 | Archived |
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