Tax Laws Amendment (Stronger, Fairer, Simpler and Other Measures) Act 2012 (23 of 2012)

Schedule 3   Small business entities' deductions for motor vehicles

Income Tax Assessment Act 1997

3   After section 328-235

Insert:

Special rules for certain motor vehicles

328-237 Special deduction for certain motor vehicles

(1) This section applies to a *depreciating asset that is a *motor vehicle if:

(a) in an income year (the start year ) you start to use the asset, or have it *installed ready for use, for a *taxable purpose; and

(b) you were a *small business entity for the start year and the income year in which you started to *hold the asset; and

(c) you chose to use this Subdivision for each of those years; and

(d) subsection 328-180(1) does not provide for your deduction for the depreciating asset for the start year.

Deduction for the start year

(2) You deduct for the *depreciating asset for the start year the amount worked out under whichever of subsections (3) and (4) applies.

(3) The amount of your deduction is the *taxable purpose proportion of the *adjustable value of the *depreciating asset at the end of the start year if that proportion of that value is $5,000 or less.

(4) If that proportion of that value is more than $5,000, the amount of your deduction is the sum of:

(a) $5,000; and

(b) 15% of the amount worked out using the formula:

(*Taxable purpose proportion x *Adjustable value of the *depreciating asset at the end of the start year) - $5,000

Special deduction denied if low pool value

(5) Subsection (2) does not apply if section 328-210 sets your deduction for a *general small business pool for the start year.

Special rules about roll-overs