Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p27
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 27/37)
Character Range: 459295–462079

governing choice of method

28‑15  Choosing between the 2 methods
 (1) Below is a diagram giving information about the 2 methods of calculating car expense deductions.
 (2) The 2 methods give you the choice of which method best suits your situation and needs. For instance, one method may involve more paperwork than the other, but could give you bigger deductions.

Operative provision

28‑20  Rules governing choice of method
 (1) You can choose only one method for all the *car expenses for the *car for the income year. Choosing one method precludes the other method.
 (2) However, you can change your choice for the income year.
Example: You choose the "log book" method and deduct $1,000. On audit, the Commissioner finds that your claim is too high and should be reduced to $500. You would have been able to deduct $700 if you had chosen the "cents per kilometre" method. This rule lets you change your choice and deduct the $700.
 (3) You can also choose different methods for the same *car for different income years and different methods for different cars for the same year.

Subdivision 28‑C—The "cents per kilometre" method

Table of sections
28‑25 How to calculate your deduction
28‑30 Capital allowances
28‑35 Substantiation

28‑25  How to calculate your deduction
 (1) To calculate your deduction using the "cents per kilometre" method, use this formula:
 (2) But you can use this formula for the first 5,000 *business kilometres only. If the *car travelled more than 5,000 business kilometres, you must discard the kilometres in excess of 5,000.
Example: If the car travelled 5,085 business kilometres, you could claim for 5,000, and would lose the extra 85.
 (3) Business kilometres are kilometres the *car travelled in the course of:
 (a) producing your assessable income; or
 (b) your *travel between workplaces.
You calculate the number of business kilometres by making a reasonable estimate.
 (4) For the purposes of subsection (1), the Commissioner may, by legislative instrument, determine rates of cents per kilometre for cars for an income year.
 (5) In determining a rate, the Commissioner must have regard to the average operating costs for the cars to be covered by that rate.
Note: Examples of operating costs include fixed costs such as registration, insurance and depreciation, and variable costs such as fuel and maintenance.

28‑30  Capital allowances
  If a *balancing adjustment event occurs for the *car, you will need to refer to the capital allowances rules in Division 40 to find out how using this method affects the operation of those rules. See section 40‑370 (about balancing adjustments for some cars).

28‑35  Substantiation
  To use this method, you do not need to substantiate the *car expenses for the *car.

Subdivision 28‑F—The "log