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Edited version of your written advice
Authorisation Number: 1012987965126
Date of advice: 23 March 2016
Ruling
Subject: Deductions - work related expenses - car expenses
Question 1
Are you entitled to calculate a deduction for car expenses, using the 'cents per kilometre' method, under Subdivision 28-C of the Income Tax Assessment Act 1997 (ITAA1997), in relation to a car that is powered entirely by an electric motor?
Answer
Yes.
This ruling applies for the following periods:
Year ending 30 June 2016
Year ending 30 June 2017
The scheme commences on:
1 July 2015
Relevant facts and circumstances
You are seriously contemplating replacing one of your work vehicles with an electric car.
You will use the car for both business and private purposes during the income year.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-5,
Income Tax Assessment Act 1997 Division 28,
Income Tax Assessment Act 1997 subdivision 28-C and
Income Tax Assessment Act 1997 section 28-25.
Reasons for decision
The Explanatory Memorandum to the Bill which became the Tax and Superannuation Laws Amendment (2015 Measures No. 5) Act 2015 explains that changes to the cents per kilometre method will enable taxpayers who drive electric and hybrid cars access to the cents per kilometre method. Previously electric and hybrid cars did not qualify to use the cents per kilometre method as the rates were based on engine size.
From 1 July 2015, separate rates based on the size of the engine are no longer available. There will be only a single rate of 66 cents per kilometre for all motor vehicles for the 2015-16 income year. The Commissioner of Taxation will determine the rate for future income years.