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Draft Taxation Determination

TD 93/D20

Fringe benefits tax: where a car has been leased and subsequently purchased by the employer, what is the depreciated value of the car for the purpose of sections 10, 11 and 12 of the Fringe Benefits Tax Assessment Act 1986 in the year in which the car was purchased?

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FOI status:

draft only - for comment

Preamble

Draft Taxation Determinations (TDs) present the preliminary, though considered, views of the ATO. Draft TDs may not be relied on; only final TDs are authoritative statements of the ATO.

1. The depreciated value is the "cost price" of the car to the employer. The term "cost price" is defined as expenditure incurred by the owner that is directly attributable to the acquistion or delivery of the car (other than registration-related expenditure (sub-subparagraph 136(1)(a)(ii)(A) of the Fringe Benefits Tax Assessment Act 1986). If the car is purchased for the residual value specified in the lease agreement, and the residual value is equal to the market value, that amount is the depreciated value.

2. If the car is purchased for the residual value, and the residual value is below the market price, subsection 13(2) applies to deem the depreciated value to be equal to the market value.

Example:

1. An employer leased a car (cost to the leasing company $20,000) on 1 July 1988 for a period of three years with a residual value of $8,000. On 1 July 1991, the employer purchased the car for $8,000 which was equal to the market value. The depreciated value of the car is $8,000 in the 1992 FBT year.
2. An employer leased a car (cost to the leasing company $20,000) on 1 July 1988 for a period of threee years with a residual value of $3,000. On 1 July 1991, the employer purchased the car for $3,000 and the market value was $8,000. The cost price of the car is deemed to be $8,000 in the 1992 FBT year.

Commissioner of Taxation
4 February 1993

References


BO SYD/DTD/92/12

ISSN 1038 - 8982

Related Rulings/Determinations:

TD 93/D20W

Subject References:
fringe benefits tax
car benefits
operating cost
depreciation
depreciated value

Legislative References:
FBTAA 10
FBTAA 11
FBTAA 12
FBTAA 136(1)(a)(ii)(A)


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