Practice Statement Law Administration

PS LA 1999/2

Calculating joint car expense deductions

• Refer to end of document for amendment history. Prior versions can be requested by emailing TCNLawPublishingandPolicy@ato.gov.au if required.
  This document has changed over time. View its history.

This Practice Statement explains how car expense deductions are calculated if the car is jointly owned, leased or hired under a hire purchase agreement.

1. How taxpayers should calculate a joint car expense deduction

For income years before 1 July 2015, taxpayers can use any one of the 4 calculation methods to calculate a joint car expense deduction:

•

cents per kilometre

•

12% of the original value

•

one-third of actual expenses

•

logbook.

Only the first and last method apply from 1 July 2015.

A taxpayer should use only one method in any one income year in relation to a specific vehicle. However, each of the joint owners can use a different method to calculate their deductions if they wish.

2. Method 1 – cents per kilometre

Each joint owner or joint lessee can claim a maximum deduction of 5,000 kilometres for each income year. That limit applies to a particular taxpayer in relation to a particular car, not to the car itself. So, if each of the joint owners uses the car for separate income-producing purposes, they can each claim up to 5,000 kilometres.

3. Method 2 – 12% of the original value

If the taxpayer travels more than 5,000 work-related kilometres in the car during in an income-producing period, they can use Method 2 to calculate their deduction.

Method 2 allows each of the joint owners to claim a proportion of the original cost of the car, to a total of 12%. That is, if there are 2 joint owners, then they can each claim a deduction of 6% of the original cost of the car.

4. Method 3 – one-third of actual expenses

Like Method 2, Method 3 is only available to taxpayers who have travelled more than 5,000 work-related kilometres in the car in an income year.

Taxpayers using this method can deduct one-third of the car's expenses (whether wholly their own or incurred jointly with other owners or lessees; and not including capital expenses) plus one third of their share of the decline in value of the car.

5. Method 4 – logbook

If the taxpayer uses a vehicle logbook, it must state:

•

when the logbook period begins and ends

•

the car's odometer readings at the start and end of the logbook period

•

the total number of kilometres that the car travelled

•

the number of kilometres travelled for work

•

the business use percentage.

For each logbook period, the taxpayer would calculate their deductions as:

(total kilometres the taxpayer travelled to produce their assessable income ÷ total number of kilometres the car travelled) × (total car expenses incurred + the decline in value for the period)


6. More information

For more information, see:

•

Motor vehicle and car expenses

•

Work-related car expenses calculator

Amendment history

© 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).

Date of Issue: 29 April 1999

Date of Effect: Ongoing

File 99/4924-1; 96/9842-6; 96/4745-7; 1-7P6KYPU; 1-14ISSDHD

Business Line:  IAI

ISSN: 2651-9526