INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

SCHEDULE 2A  

Calculating car expense deductions

TABLE OF DIVISIONS

1	Overview of the main points in this Schedule
2	Choosing which method to use
3	The ``cents per kilometre'' method
4	The ``12% of original value'' method
5	The ``one-third of actual expenses'' method
6	The ``log book'' method
7	Keeping a log book
8	Odometer records for a period
9	Retaining the log book and odometer records
10	Situations where you don't need to use one of the 4 methods
11	Definitions of ``car'', ``car expense'', ``holding a car'' and ``owning a car''

Division 1 - Overview of the main points in this Schedule  

SECTION 1-3   KEY PRINCIPLES  

Overall key principle

If you owned or leased a car, you can deduct for the car's expenses an amount or amounts calculated using one of 4 methods.

You must use one of the 4 methods unless an exception applies. If you can't use any of the methods, you can't deduct anything for the car expenses. Set out below are the key principles for the 4 methods:

Key principles for the ``cents per kilometre'' method

You multiply the business kilometres the car travelled (up to a maximum of 5,000) by the number of cents per kilometre for the car, which is found in the regulations.

Key principle for the ``12% of original value'' method

You deduct 12% of the cost of the car when you acquired it, or 12% of its market value when you began to lease it. However, the car must have travelled more than 5,000 business kilometres in the income year. You cannot deduct more than 12% of the motor vehicle depreciation limit.

Key principle for the ``one-third of actual expenses'' method

You deduct one-third of each car expense that qualifies as a deduction under this Act. However, the car must have travelled more than 5,000 business kilometres in the income year. You must substantiate the expense under Schedule 2B .

Key principle for the ``log book'' method

You multiply each deductible car expense by a business use percentage based on a reasonable estimate of the number of business kilometres. You must substantiate the expense under Schedule 2B and keep a log book and odometer records. You don't need to keep a log book every year.