I am announcing today the rates at which certain taxpayers will be able to claim income tax deductions for car expenses during the 1996-97 income year. The rates apply to no more than 5,000 business kilometres use for a car during the income year (a taxpayer whose car does travel more than 5,000 business kilometres during the year may elect to use this method because of its simplicity but can only claim 5,000 kilometres).
In those cases the law allows a taxpayer to elect to deduct car expenses on a per kilometres basis, instead of by reference to actual car expenses fully substantiated by documentary evidence.
The rates applicable for the 1996-97 income year are attached. The rates foreshadowed for the 1997-98 income year, which are based on the 1996 private motor vehicle rates for the Commonwealth Public Service set by the Department of Industrial Relations, are also attached. These foreshadowed rates will be used for 1997-98 unless the DIR rates subsequently increase.
Accordingly, those persons who pay motor vehicle allowances or reimbursements on or after 1 July 1997, and want them to fit within the taxation reasonable allowance framework, should use the foreshadowed rates.
Taxpayers whose claim for business use of a car does not exceed 5,000 kilometres during the income year ending on 30 June 1997 may claim a deduction equal to the number of business kilometres multiplied by the rate per kilometre as shown for 1996-97 in the schedule.
The rates are also used to calculate the taxable value of a number of fringe benefits (such as remote area holiday travel) provided in the fringe benefits tax year ending 31 March 1997, and the intended 1997-98 rates for fringe benefits in the year ending 31 March 1998.
CANBERRA
3 April 1997
Contact officer: John Lamerton (ATO) 216 2639
SCHEDULE: PRESCRIBED RATE OF DEDUCTION FOR CAR EXPENSES 1996-97
Year of Income Commencing 1 July 1996
|
Engine capacity of car not powered by a rotary engine (cubic centimetres) |
Engine capacity of car powered by a rotary |
Rate per kilometre (cents) |
|
Not exceeding 1600 |
Not exceeding 800 |
47.0 |
|
Exceeding 1600 but not exceeding 2600 |
Exceeding 800 but not exceeding 1300 |
53.1 |
|
Exceeding 2600 |
Exceeding 1300 |
53.5 |
PROPOSED RATE OF DEDUCTION FORCAR EXPENSES 1997-98
Year of Income Commencing 1 July 1997
|
Engine capacity of car not powered by a rotary engine (cubic centimetres) |
Engine capacity of car powered by a rotary |
Rate per kilometre (cents) |
|
Not exceeding 1600 |
Not exceeding 800 |
45.4 |
|
Exceeding 1600 but not exceeding 2600 |
Exceeding 800 but not exceeding 1300 |
51.6 |
|
Exceeding 2600 |
Exceeding 1300 |
53.5 |