Commonwealth Numbered Regulations - Explanatory Statements

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INCOME TAX ASSESSMENT AMENDMENT REGULATIONS 2004 (NO. 1) 2004 NO. 52

EXPLANATORY STATEMENT

STATUTORY RULES 2004 No. 52

Issued by authority of the Minister for Revenue and Assistant Treasurer

Income Tax Assessment Act 1997

Income Tax Assessment Amendment Regulations 2004 (No. 1)

Section 909-1 of the Income Tax Assessment Act 1997 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

The purpose of the amending regulations is to insert the 'cents per kilometre' rates for calculating deductions for car expenses for the 2003-2004 income year in Part 2 of Schedule 1 to the Income Tax Assessment Regulations 1997 (the Principal Regulations).

Division 28 of the Act outlines the four methods for calculating deductions for motor vehicle expenses. To calculate the deduction under the 'cents per kilometre' method (section 28-25), the number of business kilometres the car travelled during the year of income is multiplied by a specified number of cents. The cents per kilometre rate is determined in relation to the car's engine capacity and is prescribed in the Principal Regulations. This method can be used for the first 5,000 business kilometres only. If a taxpayer wishes to claim for more than 5,000 business kilometres, he or she must use one of the other methods outlined in Division 28 of the Act.

The number of cents used in the 'cents per kilometre' method are set out in Part 2 of Schedule 1 to the Principal Regulations. The rates are revised each year and the ones currently prescribed apply only up to and including the 2002-2003 financial year. Since the 1986-1987 financial 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 and Workplace Relations.

The rates for the 2003-2004 income year are as follows:

   Description    

   Engine capacity of car    
not powered by a
rotary engine (cubic
centimetres

   Engine capacity of car    
powered by a rotary
engine (cubic
centimetres

Rate per
   kilometre    
(cents)

Small car

Not exceeding 1600cc

Not exceeding 800cc;

51

Medium car

Exceeding 1600cc but
not exceeding 2600cc

Exceeding 800cc but not
exceeding 1300cc

61

Large car

Exceeding 2600cc

Exceeding 1300cc

62

The Regulations are also relevant for the purposes of the Fringe Benefits Tax Assessment Act 1986 (FBTAA). The definition of 'basic car rate' in subsection 136(1) of the FBTAA provides that the rate is the same as that prescribed for the purposes of section 28-25 of the ITAA 1997. 'Basic car rate' is used in the calculation of the taxable values of a number of fringe benefits.

The Regulations commenced on gazettal.


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