Draft Taxation Determination
TD 93/D45
Income tax: substantiation: car expenses: can the "12% of cost method" under subsection 82KW(3) be used if a car has been obtained by inheritance, gift or prize at no actual cost?
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Please note that the PDF version is the authorised version of this draft ruling.This document has been finalised by TD 93/56.
FOI status:
draft only - for commentPreamble
| 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. Yes. Subsection 82KW(3) provides that if the provisions of subsection 82KW(1) are satisfied, a taxpayer is entitled to a deduction of an amount equal to 12% of the cost of the car to the taxpayer. But in the case of a car obtained by inheritance, gift or prize there is no actual cost to the taxpayer.
2. As explained in IT 2308, official practice for depreciation purposes is that where property is acquired by inheritance, gift or prize, depreciation is calculated on the depreciated value or notional depreciated value of the property immediately prior to the date of acquisition.
3. This same principle will apply for subsection 82KW(3) purposes to a car obtained by inheritance, gift or prize. That is, the cost to a taxpayer for the "12% of cost method" will also be based on the depreciated value or notional depreciated value of the car immediately prior to the date of acquisition.
Commissioner of Taxation
18 February 1993