Private ruling: Motor vehicle expenses
Published: August 2012
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to a deduction for 100% of your motor vehicle expenses for a vehicle with a carrying capacity of over one tonne where you have used the vehicle for private use? | A1: No.

Relevant facts and circumstances: You are an employee. You own a vehicle with a carrying capacity of over one tonne. You use the vehicle in your work to travel from your employer's premises to visit clients. The remainder of the travel in your vehicle is between home and work and a small number of other private trips each year. You have kept a log book. You are not required to carry any bulky equipment.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1997 Section 28-12 | Income Tax Assessment Act 1997 Subsection 995-1(1) | Income Tax Assessment Act 1997 Section 28-15 | Income Tax Assessment Act 1997 Subsection 900-15(1)

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. Special substantiation rules apply using one of four methods (section 28-12 of the ITAA 1997), to claim for car expenses incurred in relation to travel within Australia. The rules do not apply unless you own or hire under a hire purchase agreement or lease a car. These rules apply to employees, self-employed persons and partnerships but not to companies or trusts. Subsection 995-1(1) of the ITAA 1997 defines a 'car' as a motor vehicle (except a motor cycle or similar vehicle) designed to carry a load of less than one tonne and fewer than nine passengers. A 'motor vehicle' is defined as any motor powered road vehicle. A vehicle designed to carry a load of more than one tonne or carry nine or more passengers is not defined as a 'car' under the ITAA 1997. Therefore, none of the four methods specified in section 28-15 of the ITAA 1997 can be used to calculate a deduction. However, a tax deduction under the ordinary provisions of section 8-1 of the ITAA 1997 can be claimed but only to the extent that expenses are incurred in gaining or producing assessable income. Subsection 900-15(1) of the ITAA 1997 requires you to substantiate your work expenses by getting written evidence of your expenditure; otherwise these expenses are not deductible under section 8-1 of the ITAA 1997. In your case you have a vehicle with a carrying capacity of more than one tonne that you use for work related purposes (travel to visit clients) and for private use (travel between home and work, and other private trips). In your case you have a vehicle with a carrying capacity of more than one tonne that you use for work related purposes and for private use. Under section 8-1 of the ITAA 1997, you are entitled to claim a deduction for the actual expenses such as fuel, oil, insurance or lease payments and any other costs associated with running the vehicle. Your deduction will however be reduced to the extent that you use the vehicle for private purposes.

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