Rate Per Kilometre Method Of Deducting Car Expenses 5,000 Business Kilometres Or Less

Assistant Treasurer, Senator Rod Kemp, today announced the rates at which certain taxpayers will be able to claim income tax deductions for car expenses during the 2000-2001 income year. The `cents per kilometre' method allows a taxpayer to claim a deduction for car expenses on a per kilometre basis, instead of by reference to actual car expenses fully substantiated by documentary evidence. The rates apply to a maximum of 5,000 business kilometres per vehicle during the income year.

The rates applicable for the 2000-2001 income year are set out in the table attached. Since the 1986-1987 income year, the rates in the Regulations have followed the rates of motor vehicle allowance for the Commonwealth Public Service set out by the Department of Employment, Workplace Relations and Small Business. The rates are reviewed each year.

Taxpayers whose claim for business use of a car does not exceed 5,000 kilometres during the income year ending on 30 June 2001 may claim a deduction equal to the number of business kilometres multiplied by the rate per kilometre as shown for the 2000-2001 income year in the table attached.

It should be noted that business kilometres in excess of 5,000 in an income year are ignored if a taxpayer chooses the `cents per kilometre' method. Taxpayers who wish to claim more than 5000 kilometres should use one of the other methods of calculating deductions for car expenses.

The 2000-2001 income year rates are also used to calculate the taxable value of a small number of fringe benefits (such as remote area holiday travel) provided in the fringe benefits tax year ending 31 March 2001. These rates should also be used as the proposed rates for fringe benefits provided in the year ending 31 March 2002.

THE RATES FOR THE 2000-2001 INCOME YEAR.

CANBERRA

17 May 2001

Media contacts:
Paul Edwards Assistant Treasurer's Office (02) 6277 7360
Vivian Bartone Australian Taxation Office (02) 6279 6831