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Ruling
Subject: Motor vehicle repairs
Question
Are you entitled to a deduction for a portion of your motor vehicle repairs in accordance with your work use percentage?
Answer
Yes
This ruling applies for the following period:
Year ended 30 June 2011
The scheme commenced on:
1 July 2010
Relevant facts and circumstances
You are a tradesperson and are required to carry heavy and bulky tools for work.
You have a motor vehicle that you use mainly for work purposes.
You have kept a logbook which provides that 9X% of your motor vehicle use is for work purposes.
During the 2010-11 income year you had an accident while driving the motor vehicle for private purposes.
You were not insured at the time of the accident.
You incurred expenses to repair the vehicle.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 25-10 and
Income Tax Assessment Act 1997 Subsection 25-10(2).
Reasons for decision
Detailed reasoning
Section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for repairs made to premises (or part of premises) or a depreciating asset that you held or used solely for the purpose of producing assessable income.
Subsection 25-10(2) of the ITAA 1997 states that where the property is held only partly for that purpose, you can deduct so much of the expenditure as is reasonable in the circumstances.
The Commissioner's view of the application of subsection 25-10(2) of the ITAA 1997 is discussed at paragraph 156 of Taxation Ruling TR 97/23. The relevant percentage of work related use of property in a year of income is required to be calculated as a proportion of the total use of the property in that year. Once calculated for a particular year of income, the percentage can be applied to the whole repair expenditure incurred in the year. For example, if a motor vehicle was used in a year of income 70% of the time for business purposes and repair expenditure was incurred on the vehicle, 70% of the expenditure is allowable. This would be the case if the repair expenditure was incurred following an accident, whether the accident happened while the vehicle was being used for business or for non-business purposes.
From the information you have provided, it is accepted that your motor vehicle is a depreciating asset. You have stated that your vehicle is used 9X% for work purposes. Accordingly you are entitled to a deduction for 9X% of the repairs. The fact that the accident occurred while you were using the vehicle for private purposes does not prevent you from claiming a deduction for the repairs.