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Edited version of your private ruling
Authorisation Number: 1012492746820
Ruling
Subject: Car expenses
Question
Does the exception from using one of the four methods under section 28-170 of the Income Tax Assessment Act 1997 apply?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2011
The scheme commenced on
1July 2010
Relevant facts
You own a utility which has a carrying capacity of less than one tonne.
You have another vehicle with a carrying capacity of over one tonne used solely for business purposes.
You keep records of the running costs for your vehicles. You have not kept a 12 week log book.
You use the utility to undertake quotation work for your business.
The private use consisted of various trips during the year.
You have another vehicle that you use for private purposes.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 28-170
Detailed reasoning
Division 28 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for car expenses when your car is used in the course of producing your assessable income. You may use one of the four methods outlined in Division 28 to calculate your work related car expenses.
However section 28-170 of the ITAA 1997 provides an exception in using one of the four methods for utility trucks used in particular ways. Where the exception applies, under subsection 28-170(2) of the ITAA 1997 you may use one of the four methods or you may instead calculate the deductions under the normal principles governing deductions, including the rules for apportioning a loss or outgoing that is only partly attributable to producing assessable income.
Under section 28-170(3) of the ITAA 1997 the exception for a utility truck may apply where, during the year, the private use of the car was minor, infrequent and irregular.
The ITAA 1997 does not define the words, minor, infrequent or irregular in relation to private use and, therefore, each of those terms will take their ordinary meaning in the context in which they are used.
The Macquarie Dictionary 2009, rev. 5th edn, The Macquarie Library Pty Ltd, NSW provides the following definitions for each of the terms:
§ minor - lesser, as in size, extent, or importance...
§ infrequent - happening or occurring at long intervals or not often... ; not constant, habitual, or regular...
§ irregular - not characterised by any fixed principle, method, or rate: irregular intervals
The requirement that the use be minor, infrequent and irregular suggests that only "one-off" activities would come within the exception. That is, all three categories must be satisfied.
The explanation of how you use your utility indicates more than just one- off activities and private use that is not regarded as minor. Although the private use may be irregular, it can not be said that the private use is minor, infrequent and irregular.
As the requirements of section 28-170 of the ITAA 1997 have not been met, you are required to use one of the four methods as set out in Division 28 of the ITAA 1997.