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Taxation Determination

TD 2009/13

Income tax: what is the car limit for the 2009-10 financial year?

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Preamble

This publication provides you with the following level of protection:

This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953.

A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes.

If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you.

Ruling

1. The car limit for the 2009-10 financial year is $57,180 .

Example

2. In July 2009 a taxpayer purchases a motor vehicle for $60,000 wholly for use in carrying on their business. In working out the vehicle's decline in value they may deduct for the 2009-10 income year, the first element of cost of the vehicle is reduced to $57,180.

Date of effect

3. This Determination applies for the financial year commencing on 1 July 2009.

Commissioner of Taxation
24 June 2009

Appendix 1 - Explanation

This Appendix is provided as information to help you understand how the Commissioner's view has been reached. It does not form part of the binding public ruling.

Explanation

4. The car limit is used to work out decline in value deductions of certain cars under the income tax law.[1]

5. The car limit is indexed annually in line with movements in the motor vehicle purchase sub-group of the Consumer Price Index.

6. For the 2007-08 financial year the index was 396.7 and for the 2008-09 financial year the index was 388.1, resulting in an indexation factor of 0.978: that is, less than 1. The law requires that where the indexation factor is less than 1, the car limit is not to be indexed.[2] As a result, the car limit for the 2009-10 financial year remains at $57,180 which applied for the 2008-09 financial year.

Footnotes

Section 40-230 of the Income Tax Assessment Act 1997 (ITAA 1997). The 'car limit' is also used to set the luxury car threshold and is used to determine if luxury car tax is payable - see Luxury Car Tax Determination LCTD 2009/1

Subsection 960-270(2) of the ITAA 1997.

Not previously issued as a draft

References

ATO references:
NO 2009/5679

Previous Rulings/Determinations:
TD 2003/18
TD 2004/27
TD 2005/30
TD 2006/44
TD 2007/22
TD 2008/17

ISSN: 1038-8982

Related Rulings/Determinations:

LCTD 2009/1

Subject References:
car limit
decline in value
luxury car depreciation limit
motor vehicle depreciation
motor vehicle depreciation limit

Legislative References:
ITAA 1997 40-230
ITAA 1997 960-270(2)
TAA 1953

TD 2009/13 history
  Date: Version: Change:
You are here 24 June 2009 Original ruling  
  25 May 2016 Withdrawn  

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