Private ruling: Deduction for motor vehicle expenses
Date of advice: 19 February 2016
Published: April 2016
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you entitled to a deduction for a portion of the insurance excess amount when claiming your car expenses using the logbook method? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 28-12 | Income Tax Assessment Act 1997 Section 28-13 | Income Tax Assessment Act 1997 Section 28-15 | Income Tax Assessment Act 1997 Section 25-10

Reasons for decision: Summary: Work related car expenses are deductible under section 28-12 of the Income Tax Assessment Act 1997 (ITAA 1997). A car expense is a loss or outgoing to do with a car (subsection 28-13(1) of the ITAA 1997). Car expenses can include insurance premiums and repairs. The portion of specific car expenses able to be claimed depends on the method used. As stated in section 28-15 of the ITAA 1997, you may choose the method that best suits your situation and needs. For substantiation purposes, each method has different requirements that must be met. Where your car expenses are claimed using the log book method, the expense must qualify as a deduction under some provision outside Division 28 of the ITAA 1997. Section 25-10 of the ITAA 1997 allows a deduction for the cost of repairs to premises or a depreciating asset held for income producing purposes, provided the repairs are not of a capital nature. Where an asset is used only partly for income producing purposes, only a portion of the expenditure is an allowable deduction. A car is regarded as a depreciating asset. Repairs to a person's car are generally an allowable deduction under section 25-10 of the ITAA 1997 to the extent it is used for the purpose of producing assessable income. In your case, you use your car for driving between two places of employment and for private purposes. Therefore only a portion of the cost of your car insurance excess is an allowable deduction. When using the log book method, your insurance excess is included as an allowable car expense and you are entitled to the business use percentage of the excess as a deduction.

Relevant facts: You had a car accident when driving your car between two different places of employment. You had completed your work for the day at your main employer and were driving to work at your second employer when the accident occurred. | You made a claim on your motor vehicle insurance and your insurer paid for the cost of repairing the damaged vehicles; however you had to pay an excess as part of the claim. | You use your car for private purposes and for driving between your places of employment.