Taxation Determination TD 2018/6
Date of effect: 1 July 2018

What this ruling is about: This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953. A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you. Ruling 1. The car limit under section 40-230 of the Income Tax Assessment Act 1997 (ITAA 1997) [1] for the 2018-19 financial year is $57,581. Example 2. In July 2018, Laura buys a car for $60,000 to use in carrying on her business. The car is of a type to which the car limit applies. As Laura started to hold the car in the 2018-19 financial year, in working out the car's decline in value for the 2018-19 income year, the first element of cost of the car is reduced to $57,581. Date of effect 3. This Determination applies for the financial year commencing on 1 July 2018. Commissioner of Taxation 23 May 2018




Appendix: 4. 'Car limit' has the meaning given by section 40-230. It is used for the purposes of applying various provisions, including working out the first element of cost of certain cars when calculating their decline in value. [2] 5. The car limit is indexed annually in line with movements in the motor vehicle purchase sub-group of the Consumer Price Index [3] , unless the indexation factor is 1 or less. [4] An amount is indexed by multiplying it by its indexation factor. [5] 6. The indexation factor for amounts that are indexed on an annual basis is calculated as: the sum of the index numbers for the quarters in the year ending on 31 March just before the start of the relevant financial year / the sum of the index numbers for the quarters in the year ending on the previous 31 March [6] 7. The sum of the index numbers for the quarters in the year ending on: resulting in an indexation factor of 0.990 (rounded to 3 decimal places [7] ). 8. As the indexation factor is less than 1, there is no indexation of the car limit. 9. The car limit for the 2018-19 financial year therefore remains at $57,581. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft




Previous rulings: TD 2013/15 TD 2014/17 TD 2015/16 TD 2016/8 TD 2017/18
Related rulings: TR 2006/10
Legislative references: ITAA 1997 ITAA 1997 40-230 ITAA 1997 40-230(1) ITAA 1997 40-230(3) ITAA 1997 Subdiv 960-M ITAA 1997 960-270(1) ITAA 1997 960-270(2) ITAA 1997 960-275(1) ITAA 1997 960-275(5) TAA 1953