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Edited version of private advice
Authorisation Number: 1052150752106
Date of advice: 4 August 2023
Ruling
Subject: Deduction - depreciation - vehicle - dual cab
Question
Is your Dual Cab utility exempt from the car limit for depreciation purposes under section 40-230 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
This ruling applies for the following period:
Year ended 30 June 2023
The scheme commenced on:
1 July 2022
Relevant facts and circumstances
You have supplied the make, model, variant and make year of a utility you purchased to carry trade equipment. You use this vehicle for work purposes only.
This vehicle is sold as a twin cab commercial utility or truck. You have supplied the gross vehicle mass and kerb weight of the vehicle. The carrying capacity of the vehicle is less than 1 tonne.
The vehicle has 5 seats.
Relevant legislative provisions
Income Tax Assessment Act 1997 (ITAA 1997) Division 40
Income Tax Assessment Act 1997 (ITAA 1997) section 40-25
Income Tax Assessment Act 1997 (ITAA 1997) section 40-230
Income Tax Assessment Act 1997 (ITAA 1997) subsection 40-230(1)
Income Tax Assessment Act 1997 (ITAA 1997) subsection 40-230(3)
Reasons for decision
A deduction for the decline in value of depreciating assets is available under Division 40 of the ITAA 1997. Specifically, a deduction is available for the decline in value of a depreciating asset that is held by you to produce assessable income under section 40-25 of the ITAA. Under subsection 40-230(1) a taxpayer cannot claim more for the depreciation of their asset than the car limit defined in subsection 40-230(3) for a vehicle designed mainly to carry passengers. The car limit in this subsection does not apply to goods vehicles.
You have given the make, model, variant and year of your utility vehicle and it seats 5 people. This vehicle is used only for work purposes. With 5 seats and a tray your vehicle is designed to carry both goods and passengers. In determining what this car was designed to carry the ATO has considered the Australian Design Rules. Under section 4.5.2 of the Vehicle Standard Australian Design Rule (ADR 2005) a vehicle designed to carry both goods and passengers is considered a goods vehicle if the number of seats multiplied by 68 kg is less than half of the carrying capacity of the vehicle, otherwise it will be considered a passenger vehicle.
You have supplied the gross mass, kerb weight, and carrying capacity of your vehicle. As the number of seats multiplied by 68 kg is less than half the carrying capacity of the vehicle it can be considered the vehicle is designed to carry goods. In this case the car limit will not apply for depreciation purposes.
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