INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision A - General  

SECTION 59AAA   DISPOSAL, LOSS OR DESTRUCTION OF CAR FOR WHICH CERTAIN METHODS HAVE BEEN USED TO CALCULATE CAR EXPENSE DEDUCTIONS  

59AAA(1)   [Application]  

This section applies if:

(a) depreciation of a car has been allowed, or is allowable, as a deduction to a taxpayer in respect of a period, or each of 2 or more periods; and

(b) the taxpayer has chosen a relevant method (see subsection (7)) for the car for a year of income or each of 2 or more years of income; and

(c) the car is disposed of, lost or destroyed at a particular time ( ``the disposal time'' ).

59AAA(1A)   [Commercial debt forgiveness]  

This section has effect subject to Division 245 of Schedule 2C .

59AAA(2)   [Depreciated value at time of disposal]  

For the purposes of section 59 (Disposal, loss or destruction of depreciated property), the car's depreciated value at the disposal time is the amount ( ``the notional amount'' ) that, in the Commissioner's opinion, would have been that depreciated value at that time if:

(a) the taxpayer had not chosen a relevant method for the car for the year of income, or any of the years of income, referred to in paragraph (1)(b); and

(b) the car expense deduction and substantiation rules (see subsection (8)) did not apply, and had never applied, in relation to depreciation of the car in respect of that year of income or any of those years of income.

59AAA(3)   [Deemed use for purpose of producing assessable income]  

In applying section 56 (Calculation of depreciation) to determine the notional amount, the taxpayer's use of the car during the year of income, or any of the years of income, referred to in paragraph (1)(b) is taken to have been for the purpose of producing the taxpayer's assessable income.

59AAA(4)   [Use of car]  

In applying section 61 (Property used partly for producing assessable income) to determine the notional amount, the taxpayer's use of the car during the year of income, or any of the years of income, referred to in paragraph (1)(b) is taken to have been:

(a) if the taxpayer used the cents per kilometre method of deducting car expenses for the car for the year of income concerned - to the extent of 20%; or

(b) if the taxpayer used the 12% of original value method - to the extent of one-third; or

(c) if the taxpayer elected that subsection 82KW(3) apply in relation to the car in relation to the year of income concerned - to the extent of one-third; or

(d) if the taxpayer elected that subsection 82KX(1) apply - to the extent of 20%;

for the purpose of producing the taxpayer's assessable income.

59AAA(5)   [Balancing amount]  

The amount ( ``the balancing amount'' ) that, under section 59 (Disposal, loss or destruction of depreciated property), is allowable as a deduction to the taxpayer, or is included in the taxpayer's assessable income, as appropriate, must be reduced if the Commissioner considers it reasonable to do so. The amount may be reduced to zero.

59AAA(6)   [Reduction of balancing amount]  

In deciding whether to reduce the balancing amount, or by how much to reduce it, the Commissioner must have regard to the proportion that the period, or the total of the periods, referred to in paragraph (1)(a) bears to the total of:

(a) that period or those periods; and

(b) the year or years of income referred to in paragraph(1)(b).

59AAA(7)   [Election of relevant method]  

A taxpayer chooses a relevant method for a car for a year of income if the taxpayer:

(a) uses the cents per kilometre method of deducting car expenses for the car for that year of income; or

(b) uses the 12% of original value method; or

(c) elects that subsection 82KW(3) apply in relation to the car in relation to the year of income; or

(d) elects that subsection 82KX(1) apply.

59AAA(8)   [Deduction and substantiation rules]  

The car expense deduction and substantiation rules are:

(a) Divisions 28 and 900 of the Income Tax Assessment Act 1997 ; or

(b) Subdivision GA of this Division and Schedules 2A and 2B to this Act; or

(c) Subdivision F of this Division;

as appropriate.