Draft Taxation Determination

TD 93/D42

Income tax: can a taxpayer who uses a motor cycle for income producing purposes use the 'cents per kilometre' method to calculate the amount of a deduction for motor cycle expenses?

• Please note that the PDF version is the authorised version of this draft ruling.
  This document has been finalised by TD 93/144.

FOI status:

Preamble

1. No. A taxpayer who uses a motor cycle for income producing purposes cannot use the cents per kilometre method to calculate a deduction for motor cycle expenses.

2. Subsection 82KX(1) of the Income Tax Assessment Act 1936 allows a taxpayer, in certain circumstances, to use the cents per kilometre method to calculate a deduction for car expenses.

3. For the purposes of subsection 82KX(1), the term 'car' does not include a motor cycle. Subsection 82KT(1) defines the term 'car'. 'Motor cycle' is expressly excluded from that definition.

Example

Bill Smith is an employee in a motor cycle courier business. He uses his own motor cycle and receives an allowance based on business kilometres travelled. He pays all of the motor cycle's running expenses. During the income year, he travels 3000 kms for business out of a total of 6000 kms. His total motor cycle expenditure for the year including depreciation of his cycle is $900. Smith cannot use the cents per kilometre method to calculate his income tax deduction for the business use of his motor cycle. However, he can claim an income tax deduction based on a business usage proportion of his total expenses provided that he maintains the correct documentation of his expenditure.

Commissioner of Taxation
18 February 1993

References

BO

Legislative References:
ITAA 82KT(1)
ITAA 82KX(1)