INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

SCHEDULE 1

Section 2

Column 1	Column 2
Acts Repealed	Extent of Repeal
Income Tax Assessment Act 1922 .	The whole
Income Tax Assessment Act 1923 .	The whole
Taxation of Loans Act 1923 .	Section five
Income Tax Assessment Act 1924 .	The whole
Income Tax Assessment (Live Stock) Act 1924 .	The whole
Income Tax Assessment Act 1925 .	The whole
Income Tax Assessment Act 1927 .	The whole
Income Tax Assessment Act 1928 .	The whole
Income Tax Assessment Act 1929 .	The whole
Income Tax Assessment Act 1930 .	The whole
Income Tax Assessment Act (No 2) 1930 .	The whole
Income Tax Assessment Act 1931 .	The whole
Financial Relief Act 1932 .	Part III
Income Tax Assessment Act 1932 .	The whole
Financial Relief Act 1933 .	Part III
Income Tax Assessment Act 1933 .	The whole
Income Tax Assessment Act 1934 .	The whole
Income Tax Assessment Act (No 2) 1934 .	The whole
Income Tax Assessment (Bonus Shares) Act 1926 .	The whole

View history note

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 1-1 MAP OF THIS SCHEDULE

SECTION 1-2 APPLICATION

1-2(1) [Individual]

This Schedule applies to you if you are an individual taxpayer.

1-2(2) [Partnership]

It also applies to a partnership that includes at least one individual, as if the partnership were an individual taxpayer.

1-2(3) [Individual as trustee]

It does not apply to an individual as a trustee.

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.

Division 2 - Choosing which method to use

SECTION 2-1 CHOOSING AMONG THE 4 METHODS

2-1(1) [Choosing suitable method]

On the next page is a graphic that gives information about the 4 methods of calculating car expense deductions.

The 4 methods give you the choice of which method best suits your situation and needs.

For instance, some methods will involve more paperwork than others, but could give you bigger deductions. There are also eligibility requirements for some methods, so you need to check that you are eligible to use a particular method.

2-1(2) [Select one method]

You can choose only one method for all the car expenses for the car for the income year. Choosing one method precludes any other method.

2-1(3) [Change of method]

However, you can change your choice for the income year.

Example:

You choose the ``log book'' method and deduct $1,000. On audit, the Commissioner finds that your claim is too high and should be reduced to $500. You would have been able to deduct $700 if you had chosen the ``cents per kilometre'' method. This rule lets you change your choice and deduct the $700.

2-1(4) [Multiple methods]

You can also choose different methods for the same car for different income years and different methods for different cars for the same year.

Division 3 - The ``cents per kilometre'' method

SECTION 3-1 THE KEY PRINCIPLE

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.

3-2 How to calculate your deduction

3-3 Depreciation

3-4 Substantiation

SECTION 3-2 HOW TO CALCULATE YOUR DEDUCTION

3-2(1) [Basis of calculation]

To calculate your deduction using the ``cents per kilometre'' method, you multiply:

• the number of business kilometres the car travelled in the income year;

by:

• a number of cents based on the car's engine capacity.

The number of cents can be found in the regulations.

[ CCH Note: The prescribed rates from 1994/95 are as follows (for the prescribed rates from 1989/90 to 1994/95, see CCH Note under s 82KX(1) ):

*For ordinary cars*	*For rotary-driven cars*	*Rate (cents) per kilometre*
		1994/95, 1995/96
Up to 1600cc	Up to 800cc	48.1
1601 - 2000cc	801 - 1000cc	54.5
2001 - 3000cc	1001 - 1500cc	56.2
Over 3000cc	Over 1500cc	58.8
		1996/97
Up to 1600cc	Up to 800cc	47.0
1601 - 2600cc	801 - 1300cc	53.1
Over 2600cc	Over 1300cc	53.5 ]

3-2(2) [Limited application]

But you can use this formula for the first 5,000 business kilometres only. If the car travelled more than 5,000 business kilometres, you must discard the kilometres in excess of 5,000.

Example:

If the car travelled 5,085 business kilometres, you could claim for 5,000, and would lose the extra 85.

3-2(3) [Business kilometres travelled]

Business kilometres are kilometres the car travelled in the course of producing your assessable income. You calculate the number of business kilometres by making a reasonable estimate.

SECTION 3-3

3-3 DEPRECIATION
If you dispose of the car, or it is lost or destroyed, you will need to refer to the depreciation rules to find out how using this method affects the operation of those rules. See section 59AAA (Disposal, loss or destruction of car for which certain methods have been used to calculate car expense deductions).

SECTION 3-4

3-4 SUBSTANTIATION
To use this method, you do not need to substantiate the car expenses for the car.

Division 4 - The ``12% of original value'' method

SECTION 4-1 THE KEY PRINCIPLE

4-2 How to calculate your deduction

4-3 Eligibility

4-4 Depreciation

4-5 Substantiation

SECTION 4-2 HOW TO CALCULATE YOUR DEDUCTION

4-2(1) [Amount deducted]

Using 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 first began to lease it.

4-2(2) [Maximum deduction]

But the most you can deduct using this method is 12% of the motor vehicle depreciation limit for the income year when you first used the car for any purpose (if you own it) or when you first began to lease it.

Note:

Section 57AF deals with motor vehicle depreciation limits.

4-2(3) [Reduced deduction]

Your deduction is reduced if you did not own or lease the car for the whole income year. You can only deduct the amount worked out using the formula:

full year deduction ×

(365 − number of car-less days)
365

The full year deduction is the amount you could deduct if you had owned or leased the car for the whole income year.

A car-less day is a day when you did not own or lease the car.

SECTION 4-3 ELIGIBILITY

4-3(1) [Minimum distance travelled]

You can use this method only if the number of business kilometres travelled by the car in the income year was more than 5,000, or would have been if you had used the car throughout the income year.

4-3(2) [Business kilometres]

Business kilometres are kilometres the car travelled in the course of producing your assessable income. You calculate the number of business kilometres by making a reasonable estimate.

SECTION 4-4

4-4 DEPRECIATION
If you dispose of the car, or it is lost or destroyed, you will need to refer to the depreciation rules to find out how using this method affects the operation of those rules. See section 59AAA (Disposal, loss or destruction of car for which certain methods have been used to calculate car expense deductions).

SECTION 4-5

4-5 SUBSTANTIATION
To use this method, you do not need to substantiate the car expenses for the car.

Division 5 - The ``one-third of actual expenses'' method

SECTION 5-1 THE KEY PRINCIPLE

5-2 How to calculate your deduction

5-3 Eligibility

5-4 Substantiation

SECTION 5-2 HOW TO CALCULATE YOUR DEDUCTION

5-2(1) [Amount deducted]

Using the ``one-third of actual expenses'' method, you deduct one-third of each car expense.

5-2(2) [Expense otherwise deductible]

The expense must qualify as a deduction under some provision of this Act outside this Schedule (or would qualify if, throughout the income year, you had used the car only in producing your assessable income). If only part of the expense would qualify, you deduct one-third of that part.

Example:

You borrow money to buy a car. You make repayments of principal and payments of interest.

You cannot deduct the repayments of principal because they are capital expenses.

The interest payments would be deductible in full if, throughout the income year, you had used the car only in producing your assessable income. Using the ``one-third of actual expenses'' method, you can deduct one-third of the interest payments.

SECTION 5-3 ELIGIBILITY

5-3(1) [Minimum distance travelled]

You can use this method only if the number of business kilometres travelled by the car in the income year was more than 5,000, or would have been if you had used the car throughout the income year.

5-3(2) [Estimated business kilometres]

Business kilometres are kilometres the car travelled in the course of producing your assessable income. You calculate the number of business kilometres by making a reasonable estimate.

SECTION 5-4

5-4 SUBSTANTIATION
To use this method, you must substantiate the expenses under Division 3 of Schedule 2B .

Division 6 - The ``log book'' method

SECTION 6-1 THE KEY PRINCIPLE

6-2 How to calculate your deduction

6-3 Eligibility

6-4 Substantiation

SECTION 6-2 HOW TO CALCULATE YOUR DEDUCTION

6-2(1) [Business use percentage]

To use the ``log book'' method, you multiply the amount of each car expense by the business use percentage.

6-2(2) The expense.

The expense must qualify as a deduction under some provision of this Act outside this Schedule (or would qualify if, while you held the car, you had used it only in producing your assessable income). If only part of the expense would qualify, you multiply that part by the business use percentage.

Example:

You borrow money to buy a car. You make repayments of principal and payments of interest.

You cannot deduct the repayments of principal because they are capital expenses.

The interest payments would be deductible in full if, throughout the income year, you had used the car only in producing your assessable income.

Using the ``log book'' method:

• if you held the car for the whole income year - multiply the interest payments by the business use percentage;

• if you held the car for only 6 months of the income year - multiply the interest payments for those 6 months by the business use percentage.

6-2(3) The percentage.

The business use percentage is calculated by dividing:

• the number of business kilometres that the car travelled in the period when you held it during the income year;

• the total number of kilometres that the car travelled in that period;

and expressing the result as a percentage.

Note: For the definition of ``holding a car'' see section 11-3 .

6-2(4) [Definition of business kilometres]

Business kilometres are kilometres the car travelled in the course of producing your assessable income.

6-2(5) [Calculation of business kilometres]

You calculate the number of business kilometres by making a reasonable estimate. The estimate must take into account all relevant matters, including:

(a) any log books, odometer records or other records you have; and

(b) any variations in the pattern of use of the car; and

(c) any changes in the number of cars you used in the course of producing your assessable income.

SECTION 6-3

6-3 ELIGIBILITY
You can use this method only if you held the car for some or all of the income year.

Note: For the definition of ``holding a car'' see section 11-3 .

SECTION 6-4 SUBSTANTIATION

6-4(1) [Prescribed rules]

To use this method, you must substantiate the car expense under Division 3 of Schedule 2B .

6-4(2) [Log book]

You must also keep a log book. Division 7 explains:

• how often you need to keep a log book;

• how to keep a log book.

The log book is relevant to estimating the number of business kilometres the car travelled in the period when you held it during the income year.

6-4(3) [Odometer records]

You must keep odometer records for the period when you held the car during the income year. Division 8 tells you about odometer records, which document the total number of kilometres the car travelled in that period.

6-4(4) [Other written evidence]

You must record the following information, in writing, before you lodge your income tax return:

(a) your estimate of the number of business kilometres; and

(b) the business use percentage.

However, the Commissioner may allow you to record the information later.

6-4(5) [Retention of records]

You must retain the log book and the odometer records. Division 9 has the rules about this.

Note: For the definition of ``holding a car'' see section 11-3 .

Division 7 - Keeping a log book

SECTION 7-1 THE KEY PRINCIPLE

A log book is relevant to estimating the number of business kilometres the car travelled in the period when you held it during the income year.

These are the steps for keeping a log book:

1. Identify an income year for which to keep a log book.

2. Choose a period of at least 12 weeks for the log book to cover.

3. Record journeys made in the car during the log book period in the course of producing your assessable income.

7-2 Income years for which you need to keep a log book

7-3 Choosing the 12 week period for a log book

7-4 How to keep a log book

7-5 Replacing one car with another

SECTION 7-2 INCOME YEARS FOR WHICH YOU NEED TO KEEP A LOG BOOK

7-2(1) [First income year]

You need to keep a log book for the first income year for which you use this method for the car.

7-2(2) [When new log book needed]

Having kept a log book for one income year, you don't need to keep a new one for the next 4 or more income years unless subsection (3) or (4) requires it. If you haven't kept a new log book for 4 income years in a row, you must keep one for the next income year.

Example:

If you keep a log book in 1995-96, you would need to keep the next one in 2000-2001, unless subsection (3) or (4) requires one sooner.

7-2(3) [Notice]

You must keep a log book for an income year if the Commissioner sends you a notice before the year directing you to keep a log book for the car for that year.

7-2(4) [More than one vehicle]

You must keep a log book for an income year if, during that year, you get one or more additional cars for which you want to use the ``log book'' method for thatyear.

7-2(5) [Car replacement]

When you replace one car with another, you might have a period when you hold both the new car and the old car, or a period when you no longer hold the old car but do not yet hold the new car. In both these cases, you are treated for the purposes of subsection (4) as if you held the one car continuously.

Note: For the definition of ``holding a car'' see section 11-3 .

7-2(6) [Optional log book]

You may choose to keep a log book for an income year even if you don't need to; for example, because you want to establish a higher business use percentage.

SECTION 7-3 CHOOSING THE 12 WEEK PERIOD FOR A LOG BOOK

7-3(1) [Continuous 12 week period]

The log book must cover a continuous period of at least 12 weeks throughout which you held the car. If you hold the car for less than 12 weeks, the period must be the entire period for which you held the car.

Note: For the definition of ``holding a car'' see section 11-3 .

7-3(2) [Income years may overlap]

The period may overlap the start or end of the income year, so long as it includes part of the year.

7-3(3) [Two or more cars]

If you want to use the ``log book'' method for 2 or more cars for the same income year, the log books for those cars must cover periods that are concurrent.

SECTION 7-4 HOW TO KEEP A LOG BOOK

7-4(1) [Recording any journey]

It is in your interests to record in the log book any journey made in the car during the log book period in the course of producing your assessable income. If a journey is not recorded, the log book will indicate a lower business use percentage than is actually the case.

7-4(2) [How to record a journey]

A journey is recorded by making in the log book an entry specifying:

(a) the day the journey began and the day it ended;

(b) the car's odometer readings at the start and end of the journey;

(c) how many kilometres the car travelled on the journey;

(d) why the journey was made.

The record must be made at the end of the journey or as soon as possible afterwards.

7-4(3) [Two or more consecutive journeys]

If 2 or more journeys in a row are made in the car on the same day in the course of producing your assessable income, they can be recorded as a single journey.

7-4(4) [Information to be recorded]

The following must be entered in the log book:

(a) when the log book period begins and ends;

(b) the car's odometer readings at the start and the end of the period;

(c) the total number of kilometres that the car travelled during the period;

(d) the number of kilometres that the car travelled, in the course of producing your assessable income, on journeys recorded in the log book;

(e) the number of kilometres referred to in paragraph (d), expressed as a percentage of the total number referred to in paragraph (c).

Each of the entries must be made at or as soon as possible after the start or end of the period, as appropriate.

7-4(5) [In English]

Each entry in the log book must be in English.

SECTION 7-5 REPLACING ONE CAR WITH ANOTHER

7-5(1) [Nominate replacement car]

For the purposes of using the ``log book'' method, you may nominate one car as having replaced another car with effect from a day specified in the nomination.

7-5(2) [Replacement car deemed original car]

After the nomination takes effect, the replacement car is treated as the original car, and the original car is treated as a different car. This means that you do not need to repeat for the replacement car the steps you have already taken for the original car under this Division.

7-5(3) [Nomination to be in writing]

You must record the nomination in writing before you lodge your income tax return for the income year in which the nomination takes effect. However, the Commissioner may allow you to do it later.

7-5(4) [Retention period]

You must retain the nomination document until the end of the period for which you must retain the last log book that you began to keep for the original car before the day of effect of the nomination.

7-5(5) [Application of sec 9-2]

Section 9-2 applies to the nomination document in the same way as it applies to that last log book.

Division 8 - Odometer records for a period

SECTION 8-1 THE KEY PRINCIPLE

Odometer records document the total number of kilometres the car travelled during a particular period. They also record the car's engine capacity and other details.

SECTION 8-2 HOW TO KEEP ODOMETER RECORDS FOR A CAR FOR A PERIOD

8-2(1) [Entries to be recorded]

Odometer records for a period are kept in the form of a document in which the following are entered:

(a) the car's odometer readings at the start and the end of the period;

(b) if a nomination under section 7-5 (Replacing one car with another) affects the car with effect from a day in that period - the odometer readings, at the end of that day, of both cars affected by the nomination.

8-2(2) [Form and time of entries]

Each entry under subsection (1) must be in English and must be made at or as soon as possible after the start or end of the period, or the end of the specified day, as appropriate.

8-2(3) [Further entries required]

The following must also be entered in the document:

(a) the car's make, model and registration number (if any);

(b) if the car has an internal combustion engine - its engine capacity expressed in cubic centimetres;

(c) if a nomination under section 7-5 (Replacing one car with another) affects the car - the corresponding details for the other car affected by the nomination.

8-2(4) [Time and form of entries]

Each entry under subsection (3) must be made in English and must be made before you lodge your income tax return.

8-2(5) [Entries after lodgment]

The Commissioner may allow you to make an entry under this section after you lodge your income tax return.

Division 9 - Retaining the log book and odometer records

SECTION 9-1 THE KEY PRINCIPLE

You must retain a log book and odometer records for a period that ends 5 years after a day determined under this Division. In the case of a log book, the 5 years do not start until after the latest income year for which you rely on the log book to support your calculation of the business use percentage for the car.

9-2 Retaining the log book for the retention period

9-3 Retaining odometer records

SECTION 9-2 RETAINING THE LOG BOOK FOR THE RETENTION PERIOD

9-2(1) [Retention period]

You must retain the log book:

(a) first, until the end of the latest income year for which you rely on the log book to support your calculation of the business use percentage for the car; and

(b) then for another 5 years.

The period for which you must retain the log book is called the retention period .

9-2(2) [Commencement]

The 5 years start on the due day for lodging your income tax return for that latest income year. If you lodge your return later, the 5 years start on the day you lodge it.

9-2(3) [Extension of retention period]

However, the retention period is extended if, when the 5 years end, you are involved in a dispute with the Commissioner that relates to a deduction worked out using a business percentage that you are relying on the log book to support. See section 7-2 of Schedule 2B .

9-2(4) [Failure to retain log book]

If you do not retain the log book for the retention period, you cannot deduct any amount worked out using a business percentage that you are relying on the log book to support. If you have already deducted such an amount, your assessment may be amended to disallow the deduction.

9-2(5) [Log book deemed record of expenses]

For the purposes of the rules about retaining and producing records of expenses (see Division 7 of Schedule 2B ), the log book is treated as a record of the car expenses for each year for which you use a business percentage that you are relying on the log book to support.

9-2(6) [Loss of log book]

If you lose the log book, there are rules that might help you in section 8-3 of Schedule 2B . For the purposes of the rules about relief from the effects of failing to substantiate (see Division 8 of Schedule 2B ), not doing something required by this Division is treated in the same way as not doing something necessary to follow the rules in Schedule 2B .

SECTION 9-3 RETAINING ODOMETER RECORDS

9-3(1) [Retention period]

You must retain your odometer records relating to the period when you held the car in the income year.

Note: For the definition of holding a car see section 11-3 .

9-3(2) [Where log book kept]

If you keep a log book for the income year, you must retain the odometer records for the same period as the log book, and section 9-2 applies to them in the same way as it applies to the log book.

9-3(3) [Where no log book kept]

If you don't keep a log book for the income year, you must retain the odometer records for the same period as written evidence of a car expense for the car for the income year, and section 3-3 of Schedule 2B applies to them in the same way as it applies to written evidence of an expense.

Division 10 - Situations where you don't need to use one of the 4 methods

SECTION 10-1 THE KEY PRINCIPLE

In certain situations you don't need to use any of the 4 methods, because it would be unusually onerous or otherwise inappropriate. These situations involve either the nature of your car or the way you use it.

10-2 Exception for particular cars used in particular ways

10-3 Further miscellaneous exceptions

10-4 Car expenses related to award transport payments

SECTION 10-2 EXCEPTION FOR PARTICULAR CARS USED IN PARTICULAR WAYS

10-2(1) [Other methods allowed]

For particular types of cars used in particular ways you don't need to use one of the 4 methods to calculate your deductions for car expenses.

10-2(2) [Normal deduction principles]

You may use one of the 4 methods, or you may instead calculate the deductions under the normal principles governing deductions, including the rules for apportioning an expense that is only partly attributable to producing assessable income.

10-2(3) [Application]

This section applies if, whenever you used the car in the income year:

(a) the car was covered by the description in column 2 of an item in the table below; and

(b) you used the car as described in column 3 of that item.

Item	Column 2 Particular car	Column 3 Exempt use
1.	The car was:	You used the car only in one or more of the following ways:
	(a)	a panel van or utility truck; or	(a)	in the course of producing your assessable income;
	(b)	any other road vehicle designed to carry a load of less than 1 tonne (other than a vehicle designed principally to carry passengers); or	(b)	to go between your residence and a place where you use the car in the course of producing your assessable income;
	(c)	a taxi.	(c)	by providing the car to someone else to drive between his or her residence and a place where the car is used in the course of producing your assessable income;
			(d)	for the purpose of travel that is incidental to using the car in the course of producing your assessable income;
			(e)	for your own or someone else's private use that was minor, infrequent and irregular.
2.	The car was part of the trading stock of a business of selling cars that you carried on.	You used the car in the course of the business.
3.	The car was any type of car.	You let the car on lease or hire in the course of a business of letting cars on lease or hire that you carry on.
4.	The car was any type of car.	As an employer (as defined in section 221A), you provided the car for the exclusive use of one or more of the following:
			(a)	your employees (as defined in section 221A);
			(b)	their relatives;
			in circumstances where one or more of them was entitled to use the car for private purposes.

SECTION 10-3 FURTHER MISCELLANEOUS EXCEPTIONS

10-3(1) [Explanation]

This section lists some miscellaneous cases where you don't need to use one of the 4 methods to calculate your deductions for car expenses.

10-3(2) [Normal principles may be used]

10-3(3) [Miscellaneous cases]

The cases are as follows:

(a) the car was unregistered throughout the period when you held it during the income year, and during that period you used the car principally in the course of producing your assessable income; or

(b) at some time during the income year the car was part of the trading stock of a business of selling cars that you carried on, and you didn't use the car at any time during that year; or

(c) the expense is to do with repairs to or other work on the car, and you incurred it in the course of a business that you carried on of doing repairs or other work on cars.

In applying paragraph (a), the car is taken to be registered in a particular place while it is lawful to drive the car on a public road there.

Note: For the definition of ``holding a car'' see section 11-3 .

SECTION 10-4 CAR EXPENSES RELATED TO AWARD TRANSPORT PAYMENTS

10-4(1) [Application]

Division 9 of Schedule 2B (Award transport payments) allows certain expenses to be deducted without getting written evidence. The expenses are transport expenses related to an allowance or reimbursement paid or payable to you by your employer under an industrial instrument that was in force on 29 October 1986.

10-4(2) [Where written evidence not required]

If that Division lets you deduct car expenses, or parts of car expenses, without getting written evidence, you don't need to use any of the 4 methods to calculate your deductions for those expenses or parts of expenses.

10-4(3) [Other car expenses]

However, your use of the 4 methods for other car expenses you incur for the car for the income year is affected, unless you elect not to rely on Division 9 of Schedule 2B . Section 9-9 of Schedule 2B deals with this matter.

Division 11 - Definitions of ``car'', ``car expense'', ``holding a car'' and ``owning a car''

SECTION 11-1 DEFINITION OF ``CAR''

11-1(1) [Specific inclusions]

A car is a motor vehicle (including a four-wheel drive vehicle) of any of these kinds:

(a) a motor car, station wagon, panel van, utility truck or similar vehicle (except a panel van or utility truck designed to carry a load of 1 tonne or more); or

(b) any other road vehicle designed to carry a load of less than 1 tonne or fewer than 9 passengers.

11-1(2) [Specific exclusions]

None of the following is a car:

(a) a motor cycle or similar vehicle;

(b) a taxi taken on hire.

11-1(3) [Hiring arrangements]

A motor vehicle is not a car if it is taken on hire under an agreement of a kind ordinarily entered into by people who take motor vehicles on hire intermittently, as the occasion requires, on an hourly, daily, weekly or short-term basis, unless the motor vehicle:

(a) has been taken on hire under successive agreements of a kind that result in substantial continuity of the motor vehicle being taken on hire; or

(b) it is reasonable to expect that the motor vehicle will be taken on hire under successive agreements of a kind that will so result.

SECTION 11-2 DEFINITION OF ``CAR EXPENSE''

11-2(1) [Car expense]

A car expense is an expense to do with a car.

11-2(2) [Specific inclusions]

In addition, any of the following is a car expense:

(a) an expense to do with operating a car;

(b) depreciation of a car.

11-2(3) [Specific exclusions]

None of the following is a car expense:

(a) an expense incurred, or a payment made, in respect of travel outside Australia;

(b) a taxi fare or similar expense.

SECTION 11-3

11-3 DEFINITION OF ``HOLDING A CAR''
You hold a car while you own it, or it is leased to you, for use in the course of producing your assessable income, even if it is also used for some other purpose.

SECTION 11-4

11-4 DEFINITION OF ``OWNING A CAR''
If you hire a car under a hire-purchase agreement, you are treated as the owner of the car for the purposes of this Schedule.

View history note

SCHEDULE 2B

Substantiation rules

TABLE OF DIVISIONS

1	Introduction
2	Substantiating work expenses
3	Substantiating car expenses
4	Substantiating business travel expenses
5	Written evidence
6	Travel records
7	Retaining and producing records
8	Relief from effects of failing to substantiate
9	Award transport payments

Division 1 - Introduction

SECTION 1-1 THE KEY PRINCIPLE

To deduct certain types of expense, you need to substantiate them under this Schedule:

For this type of expense …	… see:
• work expenses	Division 2
• car expenses	Division 3
• business travel expenses	Division 4

There are exceptions to these requirements:

• Division 2 has some specific exceptions about work expenses.

• Division 8 provides for relief from the effects of failing to substantiate.

• Division 9 has an exception about certain expenses related to award transport payments.

SECTION 1-2 APPLICATION

1-2(1) [Individual taxpayer]

This Schedule applies to you if you are an individual taxpayer.

1-2(2) [Partnership]

It also applies to a partnership that includes at least one individual, as if the partnership were an individual taxpayer.

1-2(3) [Trustee excluded]

It does not apply to an individual as a trustee.

Division 2 - Substantiating work expenses

SECTION 2-1 THE KEY PRINCIPLE
To deduct a work expense:

(a) it must qualify as a deduction under some provision of this Act outside this Schedule; and

(b) you need to substantiate it by getting written evidence and retaining that evidence for 5 years.

For some expenses for travel you also need to keep travel records.

There are exceptions where you don't need to get written evidence:

(c) if the only work expenses you claim (except of certain kinds) total $300 or less;

(d) up to $150 of laundry expenses, even if your work expenses total more than $300;

(e) expenses related to certain award transport payments;

(f) reasonable expenses covered by a travel allowance, except accommodation expenses for overseas travel;

(g) reasonable expenses covered by an overtime meal allowance.

Note:

Even if you don't need to substantiate a work expense under this Division, there may be situations where you still need to be able to show that you incurred it.

2-2 Meaning of ``work expense''

2-3 Getting written evidence

2-4 Retaining the written evidence

2-5 Exception for small total of expenses

2-6 Exception for laundry expenses below a certain limit

2-7 Exception for work expense related to award transport payment

2-8 Exception for domestic travel allowance expenses

2-9 Exception for overseas travel allowance expenses

2-10 Exception for reasonable overtime meal allowance

2-11 Crew members on international flights need not keep travel records

SECTION 2-2 MEANING OF ``WORK EXPENSE''

2-2(1) General.

A work expense is an expense you incur in producing your salary or wages.

2-2(2) Travel allowance expenses included.

Travel allowance expenses count as work expenses. A travel allowance expense is an expense you incur for travel that is covered by a travel allowance. The expense must:

(a) be for accommodation or for food or drink; or

(b) be incidental to the travel.

2-2(3) [Definition]

A travel allowance is an allowance your employer pays or is to pay to you to cover expenses:

(a) that you incur for travel away from your ordinary residence that you undertake in the course of your duties as an employee; and

(b) that are expenses for accommodation or for food or drink, or are incidental to the travel.

The travel may be within or outside Australia.

2-2(4) Meal allowance expenses included.

Meal allowance expenses count as work expenses. A meal allowance expense is an expense that you incur for food or drink that is covered by a meal allowance.

2-2(5) [Meal allowance]

A meal allowance is an allowance that your employer pays or is to pay to you as an employee to enable you to buy food or drink. However, an allowance is not a meal allowance if it is a travel allowance or part of one.

2-2(6) Motor vehicle expenses excluded.

An expense to do with a motor vehicle (including a four-wheel drive vehicle) is not treated as a work expense unless it is:

(a) an expense incurred, or a payment made, in respect of travel outside Australia; or

(b) a taxi fare or similar expense.

However, most motor vehicle expenses are covered by the rules about car expenses. See Schedule 2A and Division 3 of this Schedule.

2-2(7) Other types of expense included.

In addition to expenses within the general scope of subsection (1), any of the following is a work expense:

(a) depreciation of property you own and that is used, or is installed ready for use, by you in order to produce your salary or wages;

(b) an expense you incur that qualifies as a deduction under section 74 (Election expenses of candidates for Parliament) or 74A (Election expenses of candidates for local governments).

2-2(8) Non-deductible expenses excluded.

An expense is not a work expense unless it qualifies as a deduction under some provision of this Act outside this Schedule.

2-2(9) ``Salary or wages'', ``employer'' and ``employee''.

In this Division, ``salary or wages'' , ``employer'' and ``employee'' have the meanings given by section 221A .

SECTION 2-3 GETTING WRITTEN EVIDENCE

2-3(1) [Work expense]

To deduct a work expense, you need to substantiate it by getting written evidence. Division 5 tells you about the evidence you need.

2-3(2) [Travel records]

In addition, you need to keep travel records if your expense is for travel that involves you being away from your ordinary residence for 6 or more nights in a row.

The travel may be within or outside Australia. Division 6 tells you about travel records.

2-3(3) [International flight crews]

However, members of international flight crews may be exempt from keeping travel records for expenses covered by travel allowances: see section 2-11 .

2-3(4) [Options for fuel or oil]

If your expense is for fuel or oil, you have a choice of either:

(a) getting written evidence of it under Division 5 ; or

(b) keeping odometer records for the period when you owned or leased the car in the income year.

Division 8 of Schedule 2A tells you about odometer records.

SECTION 2-4 RETAINING THE WRITTEN EVIDENCE

2-4(1) [Retention period]

Once you have the material required by section 2-3 , you must retain it for 5 years. There is no need to lodge it with your income tax return. The Commissioner may require you to produce it: see Division 7 . The period for which you must retain it is called the retention period .

2-4(2) [Commencement of period]

The 5 years start on the due day for lodging your income tax return for the income year. If you lodge your return later, the 5 years start on the day you lodge it.

2-4(3) [Extension of period]

However, the retention period is extended if, when the 5 years end, you are involved in a dispute with the Commissioner that relates to the expense. See section 7-2 .

2-4(4) [Failure to retain]

If you do not retain the material for the retention period, you cannot deduct the expense. If you have already deducted it, your assessment may be amended to disallow the deduction.

2-4(5) [Loss of material]

If you lose any of the material, there are rules that might help you in section 8-3 .

SECTION 2-5 EXCEPTION FOR SMALL TOTAL OF EXPENSES

2-5(1) [Amount for which no records required]

If the total of all the work expenses (including laundry expenses, but excluding travel allowance expenses and meal allowance expenses) that you want to deduct is $300 or less, you can deduct them without getting written evidence or keeping travel records.

Notes:

1. If the total is more than $300 you need to substantiate all the work expenses, not just the excess over $300.

2. Whether or not your work expenses total $300 or less, for certain expenses that are each $10 or less and total $200 or less you can get written evidence by making your own record, instead of getting a document from the supplier: see section 5-6 .

2-5(2) [Increase of limit]

This limit can be increased from time to time by regulations made under section 266 .

2-5(3) [Award transport payment]

An expense that Division 9 (Award transport payments) lets you deduct without following the rules in this Schedule does not count towards this limit.

SECTION 2-6 EXCEPTION FOR LAUNDRY EXPENSES BELOW A CERTAIN LIMIT

2-6(1) [Written evidence not required]

Even if the work expenses you claim total more than $300, you can still deduct up to $150 of laundry expenses without getting written evidence of them.

2-6(2) [Laundry expenses count towards limit]

However, this exception does not increase the $300 limit in section 2-5 to $450: your laundry expenses still count toward that limit.

Example:

You want to deduct laundry expenses of $140 and union dues of $200. These work expenses total more than $300, so the exception in section 2-5 doesn't apply. This means you must substantiate the union dues expense. However, because of the exception in this section, you don't need to get written evidence of the laundry expenses.

2-6(3) [Limit increased by regulations]

This limit can be increased from time to time by regulations made under section 266 .

2-6(4) [Definition]

A laundry expense is a work expense to do with washing, drying or ironing clothes (but not dry cleaning).

SECTION 2-7

2-7 EXCEPTION FOR WORK EXPENSE RELATED TO AWARD TRANSPORT PAYMENT
You may be able to deduct, without getting written evidence or keeping travel records, a transport expense you incurred that is related to an allowance or reimbursement paid or payable to you by your employer under an industrial instrument that was in force on 29 October 1986. Division 9 tells you about this.

SECTION 2-8 EXCEPTION FOR DOMESTIC TRAVEL ALLOWANCE EXPENSES

2-8(1) [No documentation for reasonable expenses]

You can deduct a travel allowance expense for travel within Australia without getting written evidence or keeping travel records if the Commissioner considers reasonable the total of the expenses you claim for travel covered by the allowance.

2-8(2) [Determination of reasonableness]

In deciding whether the total of the expenses you claim is reasonable, the Commissioner must take into account the total of the expenses of the following kinds that it would be reasonable for you to incur for the travel:

(a) accommodation;

(b) food or drink;

(c) expenses incidental to the travel.

SECTION 2-9 EXCEPTION FOR OVERSEAS TRAVEL ALLOWANCE EXPENSES

2-9(1) [Records of accommodation expense only]

You can deduct a travel allowance expense for travel outside Australia without getting written evidence under the same conditions as for domestic travel allowances, except that you still have to get written evidence for accommodation expenses.

2-9(2) [Accommodation expense disregarded]

Consequently, in deciding whether the total of the expenses you claim is reasonable, the Commissioner must disregard accommodation expenses.

2-9(3) [Travel allowance]

However, for overseas travel covered by a travel allowance you must still keep travel records if the travel involves you being away from your ordinary residence for 6 or more nights in a row: Division 6 tells you about travel records.

SECTION 2-10

2-10 EXCEPTION FOR REASONABLE OVERTIME MEAL ALLOWANCE
You can deduct a meal allowance expense without getting written evidence if:

(a) the allowance is to enable you to buy food or drink in connection with overtime that you work; and

(b) the allowance is paid or payable to you under:

(i) a law of the Commonwealth or of a State or Territory; or

(ii) an award, order, determination or industrial agreement in force under such a law; and

(c) the Commissioner considers reasonable the total of the expenses you claim that are covered by the allowance.

SECTION 2-11

2-11 CREW MEMBERS ON INTERNATIONAL FLIGHTS NEED NOT KEEP TRAVEL RECORDS
You can deduct a travel allowance expense without keeping travel records if:

(a) the allowance covers travel by you as a crew member of an aircraft; and

(b) the travel is principally outside Australia; and

(c) the total of the expenses you claim for the travel that are covered by the allowance does not exceed the allowance.

Division 3 - Substantiating car expenses

SECTION 3-1 THE KEY PRINCIPLE

For the ``one-third of actual expenses'' method or the ``log book'' method of deducting a car expense, you need to substantiate the expense by getting written evidence and retaining it for 5 years.

3-2 Getting written evidence

3-3 Retaining the written evidence and odometer records

SECTION 3-2 GETTING WRITTEN EVIDENCE

3-2(1) [When written evidence needed]

For the ``one-third of actual expenses'' method or the ``log book'' method of deducting a car expense, you need to substantiate the expense by getting written evidence. Division 5 tells you about the evidence you need.

3-2(2) [``one-third of actual expenses'' method]

If you are using the ``one-third of actual expenses'' method and your expense is for fuel or oil, you have a choice of either:

(a) getting written evidence of it under Division 5 ; or

(b) keeping odometer records for the period when you owned or leased the car in the income year.

Division 8 of Schedule 2A tells you about odometer records.

3-2(3) [Log book method]

If you are using the ``log book'' method and your expense is for fuel or oil, you do not need to get written evidence of it, because section 6-4 of Schedule 2A already requires you to keep odometer records for the period when you held the car in the income year.

Note: For the definition of ``holding a car'' see section 11-3 of Schedule 2A .

SECTION 3-3 RETAINING THE WRITTEN EVIDENCE AND ODOMETER RECORDS

3-3(1) [Retention period]

Once you have the material required by this Division, you must retain it for 5 years. There is no need to lodge it with your income tax return. The Commissioner may require you to produce it: see Division 7 . The period for which you must retain it is called the retention period .

3-3(2) [Commencement of retention period]

The 5 years start on the due day for lodging your income tax return for the income year. If you lodge your return later, the 5 years start on the day you lodge it.

3-3(3) [Extension of period]

However, the retention period is extended if, when the 5 years end, you are involved in a dispute with the Commissioner that relates to the expense. See section 7-2 .

3-3(4) [Failure to retain]

If you do not retain the material for the retention period, you cannot deduct the expense. If you have already deducted it, your assessment may be amended to disallow the deduction.

3-3(5) [Lost material]

If you lose any of the material, there are rules that might help you in section 8-3 .

Division 4 - Substantiating business travel expenses

SECTION 4-1 THE KEY PRINCIPLE
To deduct a business travel expense:

(a) it must qualify as a deduction under some provision of this Act outside this Schedule; and

(b) you need to substantiate the expense by getting written evidence and retaining that evidence for 5 years; and

(c) you also need to keep travel records if the travel involves your being away from home for 6 or more nights in a row.

But you do not need to get written evidence of expenses for travel that does not involve you being away from home overnight.

4-2 Meaning of ``business travel expense''

4-3 Getting written evidence

4-4 Retaining the written evidence

SECTION 4-2 MEANING OF ``BUSINESS TRAVEL EXPENSE''

4-2(1) General.

A business travel expense is a travel expense, in so far as you incur it in producing your assessable income other than salary or wages.

4-2(2) ``Travel expense''.

An expense is a travel expense if you incur it for travel by you that involves you being away from your ordinary residence for at least one night. The travel may be within or outside Australia.

4-2(3) Salary and wages travel expenses excluded.

In so far as you incur travel expenses in producing your salary and wages, the expenses are not treated as business travel expenses. Instead, they are dealt with as work expenses in Division 2 .

4-2(4) Travel allowance expenses excluded.

Travel allowance expenses are not treated as business travel expenses. They too are dealt with as work expenses in Division 2 .

4-2(5) Motor vehicle expenses excluded.

An expense to do with a motor vehicle (including a four-wheel drive vehicle) is not treated as a business travel expense unless it is:

(a) an expense incurred, or a payment made, in respect of travel outside Australia; or

(b) a taxi fare or similar expense.

However, most motor vehicle expenses are covered by the rules about car expenses. See Schedule 2A and Division 3 of this Schedule.

4-2(6) Non-deductible expenses excluded.

An expense is not a business travel expense unless it qualifies as a deduction under some provision of this Act outside this Schedule.

4-2(7) ``Salary or wages''.

In this Division, ``salary or wages'' has the same meaning as in section 221A .

SECTION 4-3 GETTING WRITTEN EVIDENCE

4-3(1) [Business travel expense]

To deduct a business travel expense, you need to substantiate it by getting written evidence. Division 5 tells you about the evidence you need.

4-3(2) [Travel records]

In addition, you need to keep travel records if your expense is for travel that involves you being away from your ordinary residence for 6 or more nights in a row. Division 6 tells you about travel records.

4-3(3) [Fuel or oil expense]

If your expense is for fuel or oil, you have a choice of either:

(a) getting written evidence of it under Division 5 ; or

(b) keeping odometer records for the period when you owned or leased the car in the income year.

Division 8 of Schedule 2A tells you about odometer records.

SECTION 4-4 RETAINING THE WRITTEN EVIDENCE

4-4(1) [Retention period]

Once you have the material required by section 4-3 , you must retain it for 5 years. There is no need to lodge it with your income tax return. The Commissioner may require you to produce it: see Division 7 . The period for which you must retain it is called the retention period .

4-4(2) [Start of period]

The 5 years start on the due day for lodging your income tax return for the income year. If you lodge your return later, the 5 years start on the day you lodge it.

4-4(3) [Extension of period]

However, the retention period is extended if, when the 5 years end, you are involved in a dispute with the Commissioner that relates to the expense. See section 7-2 .

4-4(4) [Failure to retain]

If you do not retain the material for the retention period, you cannot deduct your expense. If you already have deducted it, your assessment may be amended to disallow the deduction.

4-4(5) [Loss of material]

If you lose any of the material, there are rules that might help you in section 8-3 .

Division 5 - Written evidence

SECTION 5-1 THE KEY PRINCIPLE
If you have to get written evidence to support a claim for a deduction, you must use one of the following ways:

(a) evidence from the supplier;

(b) evidence you record yourself for:

• small expenses; or

• expenses considered otherwise too hard to substantiate;

(c) evidence on a group certificate.

5-2 Choosing a way

5-3 Time limits

5-4 Written evidence from supplier

5-5 Written evidence of depreciation expense

5-6 Evidence of small expenses

5-7 Evidence of expenses considered otherwise too hard to substantiate

5-8 Evidence on a group certificate

SECTION 5-2

5-2 CHOOSING A WAY
Each of the following sections has a set of rules for a particular way of getting written evidence. Which ones you can use depends on the type of expense. You only need to use one set of rules to support an expense.

SECTION 5-3 TIME LIMITS

5-3(1) [Application]

There is, no time limit for getting written evidence of an expense (unless you want to record the expense yourself under section 5-6 or 5-7). But until you get written evidence of it, you are not entitled to a deduction for the expense.

5-3(2) [Lodgment before written evidence obtained]

If when you lodge your income tax return for the income year you have good reason to expect to get written evidence of the expense within a reasonable time, you can deduct the expense without actually getting the evidence. But if you don't get the evidence within a reasonable time, your entitlement to the deduction ceases. If you have already deducted the expense, your assessment may be amended to disallow the deduction.

5-3(3) [Deduction for relevant income year]

Even if you only get written evidence of the expense after the end of the income year, you deduct the expense for that income year, not the income year in which you get the evidence.

SECTION 5-4 WRITTEN EVIDENCE FROM SUPPLIER

5-4(1) [Application]

You may use this set of rules for any type of expense except depreciation.

5-4(2) [Written evidence in prescribed form]

You must get a document from the supplier of the goods or services the expense is for. The document must set out:

(a) the name or business name of the supplier; and

(b) the amount of the expense, expressed in the currency in which it was incurred; and

(c) the nature of the goods or services; and

(d) the day the expense was incurred; and

(e) the day it is made out.

5-4(3) [Exceptions]

There are 2 exceptions to these requirements:

(a) if the document does not show the day the expense was incurred, you may use a bank statement or other reasonable, independent evidence that shows when it was paid;

(b) if the document the supplier gave you does not specify the nature of the goods or services, you may write in the missing details yourself before you lodge your income tax return for the income year.

5-4(4) [Documents not in English]

The document must be in English. However, if the expense was incurred in a country outside Australia, the document can instead be in a language of that country.

SECTION 5-5 WRITTEN EVIDENCE OF DEPRECIATION EXPENSE

5-5(1) [Exclusive depreciation rules]

You may use this set of rules only for a depreciation expense.

5-5(2) [Document from supplier]

You must get evidence of the original acquisition of the depreciating property. It must be a document that you get from the supplier of the property and that specifies:

(a) the name or business name of the supplier; and

(b) the cost of the property to you; and

(c) the nature of the property; and

(d) the day you acquired the property; and

(e) the day it is made out.

5-5(3) [Missing details may be added]

However, if the document the supplier gave you does not specify the nature of the property, you may write in the missing details yourself before you lodge your income tax return for the income year in which you first claim a deduction for depreciation of the property.

5-5(4) [Document not obtained in time]

If you don't get the document in time, for example because you only decided to use the property for income-producing purposes several years after you acquired it, there are rules that might help you in Division 8 .

5-5(5) [Documents not in English]

The document must be in English. However, if you imported the property into Australia, the document can instead be in a language of the country from which the property was originally exported.

SECTION 5-6 EVIDENCE OF SMALL EXPENSES

5-6(1) [Own record of small expenses]

If your expense is small, and you have a small total of small expenses, you can make a record of the expenses instead of getting a document from the supplier.

5-6(2) [Expenses $10 or less]

Each expense must be $10 or less, and the total of all your expenses that:

(a) are each $10 or less; and

(b) you incurred in the income year and wish to deduct; and

(c) you must get written evidence for under this Schedule;

must be $200 or less. These limits can be increased from time to time by regulations made under section 266 .

5-6(3) [Expense not depreciation]

If the expense is not depreciation, you must get a document with the same information as required by section 5-4 , except that you may create the document and record all the details yourself. You must do so as soon as possible after incurring the expense.

5-6(4) [Prescribed information]

If the expense is depreciation, you must, as soon as possible after the last day of the income year, record in a document the following:

(a) the nature of the property;

(b) the amount of the depreciation;

(c) who made the record;

(d) the day the record is made.

5-6(5) [In English]

A record must be in English.

SECTION 5-7 EVIDENCE OF EXPENSES CONSIDERED OTHERWISE TOO HARD TO SUBSTANTIATE

5-7(1) [Small expenses rules apply]

If the Commissioner considers it unreasonable to expect you to have got written evidence of an expense in any other way permitted by this Division, you can use the method in section 5-6 to get written evidence of your claim.

5-7(2) [Limits do not apply]

The expense may be more than $10 and does not count towards the $200 limit in section 5-6 .

SECTION 5-8 EVIDENCE ON A GROUP CERTIFICATE

5-8(1) [Nature and amount of expense]

If the nature and amount of a work expense are shown on your copy of a group certificate given to you by your employer (as defined in section 221A ), you can use the copy as written evidence of the expense.

5-8(2) [Similar expenses]

Expenses of the same nature need not be separately itemised; it is acceptable if they are totalled together on the certificate.

Division 6 - Travel records

SECTION 6-1 THE KEY PRINCIPLE

A travel record is a record of activities you undertake during your travel. (It is not a record of expenses you incurred during the travel: the rules in Division 5 about written evidence cover that.)

The purpose of a travel record is to show which of your activities were undertaken in the course of producing your assessable income, so that your expenses, or portions of them, can be attributed to income-producing purposes.

6-2 Recording activities in travel records

6-3 Showing which of your activities were income-producing activities

SECTION 6-2 RECORDING ACTIVITIES IN TRAVEL RECORDS

6-2(1) [Prescribed information]

You record an activity by specifying in a diary or similar document:

(a) the nature of the activity;

(b) the day and approximate time when it began;

(c) how long it lasted;

(d) where you engaged in it.

6-2(2) [In English]

An activity must be recorded before it ends, or as soon as possible afterwards. Each entry must be in English.

SECTION 6-3 SHOWING WHICH OF YOUR ACTIVITIES WERE INCOME-PRODUCING ACTIVITIES

6-3(1) [Records not necessary]

You need not record an income-producing activity. But if you don't, the activity cannot be taken into account in working out the extent to which you can deduct an expense you incur for the travel.

Example:

If you fly to Los Angeles for the sole purpose of attending a 7 day conference, but you don't record the conference in your travel record, you cannot deduct the cost of the air fare. This is so even if you have written evidence that you paid the fare (eg a receipt), as required by Division 5 .

6-3(2) [Other activities]

You don't need to record any other kind of activity, although you may do so.

Division 7 - Retaining and producing records

SECTION 7-1 THE KEY PRINCIPLE

Whenever you are required to retain records of an expense under this Schedule or Schedule 2A , you need to retain the records for 5 years. This period is extended if, when the 5 years end, you are involved in a dispute with the Commissioner that relates to the expense. At any time during the period, the Commissioner may tell you to produce your records.

7-2 Extending the 5 years if an expense is disputed

7-3 Commissioner may tell you to produce your records

7-4 How to comply with a notice

7-5 What happens if you don't comply

SECTION 7-2

7-2 EXTENDING THE 5 YEARS IF AN EXPENSE IS DISPUTED
The retention period is automatically extended if one of the following types of dispute relating to the expense is unresolved when the 5 years end:

(a) an objection; or

(b) a review or appeal arising from an objection; or

(c) a request for amendment of an assessment.

The extension lasts until the dispute is resolved.

SECTION 7-3 COMMISSIONER MAY TELL YOU TO PRODUCE YOUR RECORDS

7-3(1) [Written notice]

The Commissioner may give you a written notice telling you to produce records of expenses specified in the notice. The records must be ones that you have to retain for the retention period: you do not have to produce records if the retention period for those records is over.

7-3(2) [Time for compliance]

The notice must give you 28 days or more to comply, starting on the day after the notice is given. The Commissioner may allow you more time to comply with the notice.

SECTION 7-4 HOW TO COMPLY WITH A NOTICE

7-4(1) [Produce prescribed material]

To comply with the notice, you must produce to the Commissioner, for each of the expenses, the material that this Schedule or Schedule 2A requires you to retain during the retention period.

7-4(2) [Summary]

You must also produce a summary that, for each expense for which you produce written evidence (see Division 5 ):

(a) notes the expense; and

(b) has a cross-reference to the written evidence of the expense; and

(c) summarises the particulars set out in the written evidence; and

(d) if the expense was in a foreign currency - shows the amount of the expense in Australian currency.

The summary must be in English in a form approved by the Commissioner.

SECTION 7-5 WHAT HAPPENS IF YOU DON'T COMPLY

7-5(1) [Deduction not allowed]

If you do not comply with a notice for a particular expense, you cannot deduct the expense. If you have already deducted it, your assessment may be amended to disallow the deduction.

7-5(2) [No offence]

You do not commit an offence merely by not complying with the notice, despite section 8C of the Taxation Administration Act1953 .

Division 8 - Relief from effects of failing to substantiate

SECTION 8-1

8-1 COMMISSIONER'S DISCRETION TO REVIEW FAILURE TO SUBSTANTIATE
Not doing something necessary to follow the rules in this Schedule does not affect your right to a deduction if the nature and quality of the evidence you have to substantiate your claim satisfies the Commissioner:

(a) that you incurred the expense; and

(b) that you are entitled to deduct the amount you claim.

SECTION 8-2

8-2 REASONABLE EXPECTATION THAT SUBSTANTIATION WOULD NOT BE REQUIRED
Not doing something necessary to follow the rules in this Schedule does not affect your right to deduct an amount if the only reason was that you had a reasonable expectation that you would not need to do it in order to be able to deduct that amount.

SECTION 8-3 WHAT IF YOUR DOCUMENTS ARE LOST OR DESTROYED?

8-3(1) [Complete copy held]

If you have a complete copy of a document that is lost or destroyed during the retention period, it is treated as the original from the time of the loss or destruction.

8-3(2) [Reasonable precautions taken]

If you don't have such a copy, but the Commissioner is satisfied that you took reasonable precautions to prevent the loss or destruction, the rest of this section explains what to do.

8-3(3) [Documents not written evidence]

If the lost or destroyed document was a travel record, log book or other document that is not written evidence of an expense under Division 5 , you do not need to replace it; your deduction is not affected by your failing to retain or produce the document.

8-3(4) [Substitute needed]

If the lost or destroyed document was written evidence, you must try to get a substitute document that meets all the original requirements (except the time limit for getting the original).

8-3(5) [Substitute deemed original]

If you succeed, your deduction is not affected by your failing to retain or produce the original document. The substitute document is treated as the original from the time of the loss or destruction.

8-3(6) [Substitute not needed]

If it is not reasonably possible to succeed, your deduction is not affected by your failing to retain or produce the original document.

8-3(7) [Failure to obtain substitute]

If it is reasonably possible for you to get a substitute document, but you don't get one, this section does not protect you from the consequences of failing to retain or produce the original.

Division 9 - Award transport payments

SECTION 9-1 THE KEY PRINCIPLE

You can deduct an expense related to an award transport payment without getting written evidence or keeping travel records.

But for each payment, you must limit the total of your claims to no more than the payment you would have received under the award as in force on 29 October 1986. (Some changes made to an award after 29 October 1986 are treated as if they had been made on that day.)

Also, the expense must qualify as a deduction under some provision of this Act outside this Schedule.

Using this exception can affect how you calculate your car expense deductions.

9-2 Deducting an expense related to an award transport payment

9-3 Definition of ``award transport payment''

9-4 Substituted industrial instruments

9-5 Changes to industrial instruments applied for before 29 October 1986

9-6 Changes to industrial instruments solely referable to matters in the instrument

9-7 Deducting in anticipation of receiving award transport payment

9-8 Effect of exception in this Division on exception for small total of expenses

9-9 Effect of exception in this Division on methods of deducting car expenses

SECTION 9-2 DEDUCTING AN EXPENSE RELATED TO AN AWARD TRANSPORT PAYMENT

9-2(1) The exception.

If:

(a) you are paid one or more award transport payments in the income year; and

(b) the total of the transport expenses, to the extent that they relate to the award transport payments, that you incur during any income year and claim as deductions in any income year is no more than the total amount of the payments;

then you can deduct those transport expenses without getting written evidence or keeping travel records.

9-2(2) Increases to amounts payable under industrial instrument must be ignored.

For each award transport payment, you can deduct no more than the amount you could have deducted if the industrial instrument the payment is under were still in force as it was on 29 October 1986. If your claim exceeds this amount, you cannot use the exception for the expenses.

SECTION 9-3 DEFINITION OF ``AWARD TRANSPORT PAYMENT''

9-3(1) ``Award transport payment''.

An award transport payment is a transport payment covering particular travel that was paid under an industrial instrument that was in force on 29 October 1986.

9-3(2) ``Transport payment''.

A transport payment is an amount your employer (as defined in section 221A ) pays you, or is to pay you, for travel by you in the course of working for the employer that is:

(a) an allowance (or part of an allowance) for the sole or main purpose of covering your transport expenses; or

(b) a reimbursement to which paragraph 26(eaa) applies that is for the whole or a part of a car expense (as defined in section 11-2 of Schedule 2A ).

However, an amount is not a transport payment if it is, or is part of, a travel allowance (as defined in section 2-2 ).

9-3(3) ``Industrial instrument''.

An industrial instrument is a law of the Commonwealth or of a State or Territory or an award, order, determination or industrial agreement in force under such a law.

9-3(4) ``Transport expense''.

A transport expense is a cost to do with transport, including depreciation of property used in connection with transport, but not including a cost of accommodation, a cost of buying food or drink or expenditure incidental to transport.

SECTION 9-4

9-4 SUBSTITUTED INDUSTRIAL INSTRUMENTS
An industrial instrument that comes into force in substitution for another industrial instrument is taken to be a continuation of the original instrument.

SECTION 9-5 CHANGES TO INDUSTRIAL INSTRUMENTS APPLIED FOR BEFORE 29 OCTOBER 1986

9-5(1) [Deemed application date]

Changes made to an industrial instrument after 29 October 1986 are taken to have been made on 29 October 1986 if they were made in response to an application made on or before 29 October 1986 that sought increases in transport payments.

9-5(2) [Amended application]

If the application was amended after 29 October 1986, the alterations made to the industrial instrument count as being made on 29 October 1986 only if they did not result in increases in transport payments that were greater than increases in those payments sought by the application as at 29 October 1986.

SECTION 9-6

9-6 CHANGES TO INDUSTRIAL INSTRUMENTS SOLELY REFERABLE TO MATTERS IN THE INSTRUMENT
Changes made to an industrial instrument after 29 October 1986 are taken to have been made on 29 October 1986 if the whole amount of the change is determined solely by reference to matters that were contained in the industrial instrument on 29 October 1986.

SECTION 9-7 DEDUCTING IN ANTICIPATION OF RECEIVING AWARD TRANSPORT PAYMENT

9-7(1) [Reasonable belief of payment]

If:

(a) you have incurred a transport expense during an income year; and

(b) when you lodge your income tax return for the income year, you reasonably believe that you will later receive an award transport payment to cover the expense;

you may deduct the expense without getting written evidence or keeping travel records.

9-7(2) [Commissioner may disallow deduction]

However, if the Commissioner becomes satisfied that you will not receive the award transport payment after all, then, despite section 170, he or she may at any time disallow the deduction and amend your assessment accordingly.

SECTION 9-8

9-8 EFFECT OF EXCEPTION IN THIS DIVISION ON EXCEPTION FOR SMALL TOTAL OF EXPENSES
An expense that section 9-2 lets you deduct without getting written evidence or keeping travel records does not count towards the $300 limit in section 2-5.

SECTION 9-9 EFFECT OF EXCEPTION IN THIS DIVISION ON METHODS OF CALCULATING CAR EXPENSE DEDUCTIONS

9-9(1) [Exempt expenses]

If the exception in this Division lets you deduct, without getting written evidence or keeping travel records, expenses ( ``exempt expenses'' ) that are or include car expenses, or parts of car expenses, your use of the 4 methods for calculating deductions for car expenses for the car is affected.

9-9(2) You may elect not to use the exception.

However, if you do not want your use of the 4 methods to be affected, you may elect not to use the exception in this Division for the award transport payments you are paid in the income year. If you so elect, the rest of this section does not affect you.

9-9(3) ``Cents per kilometre'' method.

You can still use the ``cents per kilometre'' method (see Division 3 of Schedule 2A ) of deducting car expenses you incurred for the car in the income year. However, the kilometres the car travelled during the income year in the course of travel covered by the award transport payment or payments are not counted as business kilometres.

9-9(4) ``12% of original value'' and ``one-third of actual expenses'' methods.

You cannot use the `` 12% of original value'' method (see Division 4 of Schedule 2A ) or the ``one-third of actual expenses'' method (see Division 5 of Schedule 2A ) of deducting car expenses you incurred for the car in the income year.

9-9(5) ``Log book'' method.

You can still use the ``log book'' method (see Division 6 of Schedule 2A ) of deducting car expenses you incurred for the car in the income year. If you do:

(a) the kilometres the car travelled during the income year in the course of travel covered by the award transport payment or payments are not counted as business kilometres; and

(b) in working out the amount (if any) you can deduct for such a car expense that consists partly of an exempt expense, Division 6 of Schedule 2A is applied to the whole of the car expense, without excluding the part that consists of an exempt expense.

View history note

SCHEDULE 2C - Forgiveness of commercial debts

CCH Note:

Below is material repealed as inoperative in Sch 2C by No 101 of 2006.

Division 245 - Forgiveness of commercial debts

SECTION 245-70 MONEY OR OTHER PROPERTY APPLIED FOR BENEFIT OF CREDITOR

CCH Note:

Below is material repealed as inoperative in s 245-70 by No 101 of 2006.

245-70(3) [Operation of sec 19]

This section does not limit the operation of section 19 .

SECTION 245-140 DEFINITIONS APPLICABLE TO PROVISIONS REDUCING DEDUCTIBLE EXPENDITURE

CCH Note:

Below is material repealed as inoperative in s 245-140 by No 101 of 2006.

245-140(1) [Definitions]

Table of deductible expenditure
	Column 1	Column 2
Item	General description of expenditure	Provision under which a deduction is allowable in respect of the expenditure
1	Cost of plant or articles used (or installed ready for use) to produce assessable income	Subsections 54(1), 56(1), 57AK(4) and 57AM(5), (7), (9), (10) and (11) of this Act or the former Division 42 of the Income Tax Assessment Act 1997
.
3	Expenditure on software, pooled	The former Subdivision 46-D of the Income Tax Assessment Act 1997
.
5	Expenditure on a telephone line on land on which a business of primary production is carried on	The former Subdivision 387-F of the Income Tax Assessment Act 1997
.
6	Expenditure in connecting or upgrading mains electricity facilities on land used or intended for use in producing assessable income	The former Subdivision 387-E of the Income Tax Assessment Act 1997
.
9	Expenditure in connection with clearing and preparing land for primary production	Subsection 75A(3)
.
10	Expenditure on establishing a grape vine	The former Subdivision 387-D of the Income Tax Assessment Act 1997
.
11	Expenditure on plant or structural improvements for conserving or conveying water	The former Subdivision 387-B of the Income Tax Assessment Act 1997
.
12	Expenditure on certain kinds of plant and equipment for use in very large development projects	Subsections 82AB(1) and 82AT(1)
.
13	Expenditure on environmental impact assessment	item 1, 2 or 3 of the table in the former subsection 400-15(3) of the Income Tax Assessment Act 1997
.
15	Expenditure incurred in relation to mining or quarrying operations	The former Subdivision 330-C of the Income Tax Assessment Act 1997
.
16	Expenditure incurred on exploration or prospecting for minerals or quarry materials	The former Subdivision 330-A of the Income Tax Assessment Act 1997
.
17	Expenditure incurred in transporting minerals or quarry materials	The former Subdivision 330-H of the Income Tax Assessment Act 1997
.
18	Expenditure on forestry roads to an area of timber operations	The former Subdivision 387-G of the Income Tax Assessment Act 1997
.
19	Expenditure on timber buildings used for timber milling business, if the buildings are in a forest or adjacent to a timber milling or timber felling area	The former Subdivision 387-G of the Income Tax Assessment Act 1997
.
21	Expenditure on acquiring an item of intellectual property to produce assessable income	The former Subdivision 373-B of the Income Tax Assessment Act 1997
.
24	Expenditure incurred in establishing horticultural plants	The former Subdivision 387-C
.
25	Expenditure incurred in obtaining a spectrum licence to produce assessable income	The former Division 380 of the Income Tax Assessment Act 1997

245-140(1A) [Deductible expenditure - forgiveness year]

If the forgiveness year of income is the 1997-98 year of income, paragraph (a) of the definition of deductible expenditure in subsection (1) applies to expenditure that is taken by Division 330 of the Income Tax (Transitional Provisions) Act 1997 to be incurred in that year of income as if it had been incurred before the forgiveness year of income.

View history note

SCHEDULE 2D - Tax exempt entities that become taxable

CCH Note:

Below is material substituted or repealed as inoperative in Sch 2D by No 101 of 2006.

SECTION 57-25 DEEMED DISPOSAL AND RE-ACQUISITION OF ASSETS

CCH Note:

Below is material repealed as inoperative in s 57-25 by No 101 of 2006.

57-25(2) Deemed disposal and re-purchase.

Subject to subsection (5), in determining:

(a) for the purposes of this Act (other than Part IIIA and the excluded provisions mentioned in subsection (4)) whether an amount is included in, or allowable as a deduction from, the assessable income of the transition taxpayer in respect of the disposal; or

(b) for the purposes of Part IIIA :

(i) whether a capital gain accrues to the transition taxpayer in respect of the disposal; or

(ii) whether the transition taxpayer incurs a capital loss in respect of the disposal;

the transition taxpayer is taken:

(c) to have sold, immediately before the transition time, each of its assets; and

(d) to have purchased each of its assets again at the transition time for consideration equal to the asset's adjusted market value at the transition time.

57-25(4)

(a) sections 53I to 62AAV of this Act(relating to depreciation on trading ships); and

(b) Subdivision B of Division 3 of Part III of this Act (about development allowance); and

(c) Divisions 10 , 10AAA , 10AA and 10AB of Part III (about operations relevant to the mining and quarrying industry); and

(d) Division 10A of Part III (about timber operations and timber mill buildings); and

(g) Divisions 10C and 10D (about deductions for capital expenditure on some buildings); and

(h) the former Division 42 of the Income Tax Assessment Act 1997 (about depreciation); and

(k) the former Division 330 of the Income Tax Assessment Act 1997 (about mining and quarrying); and

(l) the former Subdivision 387-G of the Income Tax Assessment Act 1997 (about forestry roads and timber mill buildings).

SECTION 57-35

57-35 INTERPRETATION

CCH Note:

Below is material repealed as inoperative in s 57-35 (para (d) of the definition of " asset " ) by No 101 of 2006.

(d) any asset within the meaning of Part IIIA; and

Subdivision 57-I - Depreciation deductions

SECTION 57-80 DEPRECIATION

57-80(1) [Application of section]

This section applies in determining a deduction allowable to the transition taxpayer in respect of any period (the depreciation period ) after the transition time for depreciation under Subdivision A of Division 3 of Part III in respect of a unit of property, if the property was owned by the transition taxpayer at the transition time.

57-80(2) Assume that the transition taxpayer had never been exempt.

Assume that, at all times before the transition time, when the unit of property was owned by:

(a) the transition taxpayer; or

(b) an associate (see subsection (5));

the transition taxpayer's income had not been exempt from income tax and no provision of this Act had denied a deduction for depreciation in respect of the unit.

57-80(3) Deemed method of depreciation.

The transition taxpayer is taken to have used the same method of depreciation in relation to the unit of property in each year before the transition year as it uses for:

(a) the transition year; or

(b) if the transition taxpayer does not claim depreciation for the transition year - the first year after the transition year in which the transition taxpayer claims depreciation.

57-80(4) Elections under section 54A.

If, assuming that the income of the transition taxpayer had never been wholly exempt from income tax, the transition taxpayer could have made an election under subsection 54A(1) at a particular time before the transition time, the transition taxpayer is taken to have made the election at that time.

57-80(5) Elections under subsection 59(2A).

If, assuming that the income of the transition taxpayer had never been wholly exempt from income tax, the transition taxpayer could have made or could make an election under subsection 59(2A) in relation to the disposal, loss or destruction of a unit of property taking place before the transition time, the transition taxpayer is taken not to have made and not to be able to make that election.

57-80(6) Definitions.

In this section:

associate
has the same meaning as in subsection 26AAB(14) .

method of depreciation
means the way of working out the depreciation allowable under this Act in respect of a unit of property set out in paragraph 56(1)(a) or (b).

SECTION 57-85 WHAT ARE THE MODIFIED DEDUCTION RULES AND CORRESPONDING DEDUCTION PROVISIONS ?

CCH Note:

Below is material repealed as inoperative in s 57-85(3) (table) by No 101 of 2006.

57-85(3)

Modified deduction rules and corresponding deduction provisions
Column 1	Column 2	Column 3	Column 4
Item	Description	Modified deduction rule	Corresponding deduction provision
2	Electricity connections	the former Subdivision 387-E or Subdivision 40G	Section 70A
.
3	Environmental impact assessment	the former Subdivision 400-A or Subdivision 40-I	Subdivision C of Division 3 of Part III
.
4	Environmental protection	the former Subdivision 400-B or Subdivision 40-H	Subdivision CA of Division 3 of Part III
.
6	Grapevines	the former Subdivision 387-D or Subdivision 40-F	Section 75AA
.
7A	Intellectual property	the former Subdivision 373-B or Subdivision 40-B	Division 10B of Part III
.
8	Landcare operations	the former Subdivision 387-A or Subdivision 40-G	Section 75D
.
10	Mining and quarrying	the former Subdivision 330-C or Subdivision 40-B or 40-I	Division 10 of Part III (except sections 122J and 122JF) or Division 10AA of Part III (except section 124AH) (as appropriate)
.
11	Mining transport and quarrying transport	the former Subdivision 330-H or subdivision 40-B or 40-I	Division 10AAA of Part III
.
12	Mining etc. site rehabilitation	the former Subdivision 330-I or Subdivision 40-H	Division 10AB of Part III
.
14A	Software	the former Subdivisions 46-B and 46-D or Subdivisions 40-B and 40-E and section 40-335
.
14B	Spectrum licences	the former Subdivision 380-A or Subdivision 40-B
.
15	Telephone lines	the former Subdivision 387-F or Subdivision 40-G	Section 70
.
16	Timber mill buildings	the former Subdivision 387-G or Subdivision 40-B	Subdivision B of Division 10A of Part III
.
17	Timber operations: forestry roads	the former Subdivision 387-G or Subdivision 40-B	Subdivision A of Division 10A of Part III

SECTION 57-110 APPORTIONMENT OF BALANCING ADJUSTMENTS

CCH Note:

Below is material repealed as inoperative in s 57-110 by No 101 of 2006.

57-110(2)

Balancing adjustment provisions and related deduction rules
Item	Topic	Balancing adjustment provision	Deduction rule to which the balancing adjustment provision relates
2	Depreciation	Section 42-30	The former Division 42 and sections 531 to 62AAV (inclusive)
3	Depreciation on trading ships	Section 59	Sections 53I to 62AAV (inclusive)
.
4	Grapevines	The former section 387-315	The former Subdivision 387-D and section 75AA
.
5A	Intellectual property	The former Subdivisions 373-C and 373-D	The former Subdivision 373-B and Division 10B of Part III
.
6	Exploration, prospecting, mining, quarrying and transporting mined or quarried product	The former Subdivision 330-J	Whichever of the following former Subdivisions is appropriate: • Subdivision 330-A • Subdivision 330-C • Subdivision 330-H and whichever of the following is appropriate: • Division 10 of Part III • Division 10AAA of Part III • Division 10AA of Part III
.
8A	Spectrum licences	The former Subdivisions 380-B, 380-C and 380-D	The former Subdivision 380-A
.
9	Timber mill buildings and forestry roads	The former Section 387-485	The former Subdivision 387-G and whichever of Subdivisions A and B of Division 10A of Part III is appropriate

SCHEDULE 2E - LEASES OF LUXURY CARS

CCH Note:

Below is material substituted in Sch 2E by No 101 of 2006.

SECTION 42A-115

42A-115 GENERAL DEFINITIONS

motor car
or car means a unit of property referred to in subsection 57AF(1) .

SCHEDULE 2F - TRUST LOSSES AND OTHER DEDUCTIONS

CCH Note:

Below is material substituted or repealed as inoperative in Sch 2F by No 101 of 2006.

SECTION 268-35 HOW TO ATTRIBUTE DEDUCTIONS TO PERIODS

CCH Note:

Below is material repealed as inoperative in s 268-35 by No 101 of 2006.

268-35(2)

(a) deductions for depreciation;

See section 54 , and Division 42 of the Income Tax Assessment Act 1997 .

(b) deductions for exploration or prospecting expenditure, or allowable capital expenditure, in connection with mining or quarrying;

See Divisions 10 , 10AAA and 10AB of Part III , and the former Division 330 of the Income Tax Assessment Act 1997.

(c) deductions for expenditure, deductions for which are spread over 2 or more years, but not:

(i) deductions for exploration or prospecting expenditure, or capital expenditure, in connection with mining or quarrying; or
See Divisions 10 , 10AAA and 10AB of Part III , and the former Division 330 of the Income Tax Assessment Act 1997.

(ii) full year deductions (see subsection (5));

268-35(5)

(d) deductions allowable under section 78 (Gifts, pensions etc.) or 78B (Promoters recoupment tax) or under Division 30 of the Income Tax Assessment Act 1997 ;

(i) deductions for Income Equalization Deposits;

See Division 16C of Part III of the Income Tax Assessment Act 1936 .

SECTION 268-50 HOW TO CALCULATE THE TRUST'S SECTION 79E LOSS FOR THE INCOME YEAR

268-50(1)
For the purposes of section 79E (General domestic losses of post-1989 years of income), instead of working out the trust's loss for the year under subsection (1) of that section, it is worked out as follows.

268-50(2)
Total the notional losses worked out under section 268-30 or 268-70 .

268-50(3)
Add to the total in subsection (2) the amount (if any) by which the trust's full year deductions of these kinds:

(a) deductions for bad debts under section 51 (Losses and outgoings);

(b) deductions for bad debts under section 63 (Bad debts);

(c) deductions, so far as they are allowable under section 51 of this Act because Subdivision H (Period of deductibility of certain advance expenditure) of Division 3 of Part III applies to the trust in relation to the income year;

exceed the total of:

(d) the notional net incomes (if any); and

To work out the notional net income: see sections 268-30 and 268-70 .

(e) the full year amounts referred to in section 268-40 (if any).

268-50(4)
If the trust derived exempt income, subtract its net exempt income as defined in subsection 79E(12) .

268-50(5)
Any amount remaining is the trust's loss for the income year.

To find out how much of the loss can be deducted in later income years, see Division 266 or 267 .

To find out how to deduct it, see section 79E .

SECTION 268-55 HOW TO WORK OUT THE TRUST'S FILM LOSS FOR THE INCOME YEAR

268-55(1)
For the purposes of section 79F (Film losses of post-1989 years of income), instead of working out the trust's film loss for the year under subsection (1) of that section, it is worked out as follows.

268-55(2)
Apply subsections 268-50(2) and (3) , making the following changes:

(a) take into account assessable film income (as defined in subsection 79F(12) ), but not any other assessable income;

(b) take into account film deductions (as defined in subsection 79F(12) ), but not any other allowable deductions.

268-55(3)
If the trust derived exempt film income (as defined in subsection 79E(12) ), subtract from the amount worked out under subsection (2) of this section the trust's net exempt film income (as defined in subsection 79E(12) ).

268-55(4)
Apply section 268-50 .

268-55(5)
The trust's film loss for the income year is the amount worked out under subsection (3), to the extent that it is not greater than the amount worked out under subsection (4).

SECTION 271-85 RECOVERY OF TAX

271-85(1)
Any unpaid family trust distribution tax may be sued for and recovered in a court of competent jurisdiction by the Commissioner suing in his or her official name.

View history note

Application

271-85(2)
Subsection (1) does not apply in relation to any family trust distribution tax or additional tax that becomes due and payable on or after 1 July 2000.

Note:

For provisions about collection and recovery of family trust distribution tax, additional tax and other amounts on or after 1 July 2000, see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953 .

View history note

SECTION 272-90 FAMILY GROUP
Funds

272-90(6)
A fund, authority or institution in Australia that is:

(a) mentioned in any of the tables in subsection 78(4) or covered by paragraph 78(5)(a) ; or

(b) mentioned in item 1 or 2 of the table in section 30-15 of the Income Tax Assessment Act 1997 ;

is a member of the primary individual's family group in relation to the conferral or distribution if, assuming that a deduction were allowable under section 78 , or Division 30 of the Income Tax Assessment Act 1997 , in respect of the conferral or distribution, section 78A would not prevent any of the deduction being allowable.

Certain tax exempt bodies

272-90(7)
An institution, hospital, trustee, society, association, club, or fund, all of whose income is exempt under:

(a) paragraph 23(e), (ea), (ec), (g) or (j) ; or

(b) section 50-5 , 50-10 or 50-20 , item 6.1 or 6.2 of the table in section 50-30 , or item 9.1 or 9.2 of the table in section 50-45 , of the Income Tax Assessment Act 1997 ;

View history note

SCHEDULE 2G - FARM MANAGEMENT DEPOSITS

CCH Note:

Below is material substituted or repealed as inoperative in Sch 2G by No 101 of 2006.

SECTION 393-15 ASSESSABILITY ON REPAYMENT OF DEPOSIT
Deemed repayment because of death, bankruptcy, etc

393-15(4)

Note 2:

Under Division 6A of Part VI , a deduction will nevertheless be required to be made from the actual repayment.

SECTION 393-25

393-25 VARIOUS DEFINITIONS

CCH Note:

Below is material repealed as inoperative in s 393-25 by No 101 of 2006.

deduction exemption certificate
has the meaning given by subsection 221ZXE(1) .

SCHEDULE 2H - DEMUTUALISATION OF MUTUAL ENTITIES OTHER THAN INSURANCE COMPANIES

CCH Note:

Below is material substituted or repealed as inoperative in Sch 2H by No 101 of 2006.

326-5(5)
In so far as this Division has effect for the purposes of Part IIIA:

(a) a reference to a person making or not making a capital gain is taken to be a reference to a capital gain accruing or not accruing, as the case may be, to the person; and

(b) a reference to a person making or not making a capital loss is taken to be a reference to the person incurring or not incurring, as the case may be, a capital loss; and

(c) a reference to a person being taken to have paid an amount for the acquisition of a share or an interest in a share is a reference to a person being taken to have paid the amount as consideration for the acquisition of the share or interest.

SECTION 326-70 APPLICATION OF SUBDIVISION

326-70(1)

(b) other shares ( non-demutualisation bonus shares ) in the same company, or an interest in such shares, where:

(i) the shares are bonus shares mentioned in Division 8 of Part IIIA and any of the demutualisation shares (whether or not disposed of at the time) are the original shares mentioned in that Division; or

(ii) the shares are bonus equities mentioned in Subdivision 130-A of the Income Tax Assessment Act 1997 and any of the demutualisation shares (whether or not disposed of at the time) are the original equities mentioned in that Subdivision.

SECTION 326-135 APPLICATION OF SUBDIVISION

326-135(1)

(b) other shares ( non-demutualisation bonus shares ) in the same company, or an interest in such shares, where:

(i) the shares are bonus shares mentioned in Division 8 of Part IIIA of this Act and any of the demutualisation shares (whether or not disposed of at the time) are the original shares mentioned in that Division; or

(ii) the shares are bonus equities mentioned in Subdivision 130-A of the Income Tax Assessment Act 1997 and any of the demutualisation shares (whether or not disposed of at the time) are the original equities mentioned in that Subdivision.

SECTION 326-190 EXTINGUISHMENT OF RIGHT TO SHARES IN DEMUTUALISED ENTITY BY THE ISSUE OF THE SHARES

326-190(1)
If, under the direct method of demutualisation or the holding company method of demutualisation, shares in a demutualised entity are issued to an existing member, neither Part IIIA of this Act nor Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 apply in respect of any disposal of, or any CGT event constituted by the extinguishment of, as the case may be, the member's right to have the shares issued to the member.

326-190(2)
If, under the combined direct and holding company method of demutualisation, shares in a demutualised entity or in a holding company are issued to an existing member, neither Part IIIA of this Act nor Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 apply in respect of any disposal of, or any CGT event constituted by the extinguishment of, as the case may be, the member's rights to have the shares issued to the member.

View history note

SECTION 326-215 CHANGE OF RIGHTS TO, AND REPLACEMENT OF, SPECIAL SHARES

326-215(2)
Neither Part IIIA of this Act nor Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 apply in respect of the change in rights.

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INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

Calculating car expense deductions

TABLE OF DIVISIONS

Overall key principle

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

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

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

Key principle for the ``log book'' method

Note:

Substantiation rules

TABLE OF DIVISIONS

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