Practice Statement Law Administration

PS LA 1999/2

Calculating joint car expense deductions

This version is no longer current. Please follow this link to view the current version.

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

FOI status: may be released

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

1. How should the taxpayer calculate the deduction?

They can use any one of four calculation methods:

•

cents per kilometre

•

12% of the original value

•

one third of actual expenses

•

using a log book.

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

2. Method 1 - cents per km

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

3. Method 2 - 12% of the original value

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

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

4. Method 3 - one third of actual expenses

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

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

5. Method 4 - using a logbook

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

•

when the logbook period begins and ends

•

the car's odometer readings at the start and end

•

the total number of kilometres that the car travelled

•

the number of kilometres travelled for work

•

the business use percentage.

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

(Total km the taxpayer travelled to produce their assessable income divided by the total number of kilometres the car travelled) multiplied by (the total car expenses incurred plus the car's total depreciation for the period).

6. More information

For more information, see:

•

on how the four methods work, see Income and deductions - Car expenses

•

an online calculator to assist with the calculation of car expenses, see Work-related car expenses calculator

Amendment history

Date of Issue: 29 April 1999

Date of Effect: Ongoing

File NO 99/4924-1; NO 96/9842-6; NO 96/4745-7

Subject References:
common ownership
deductions and expenses
documentation and records
joint interests
joint liability
joint tenancy
motor vehicle expenses
motor vehicle use substantiation
motor vehicles
salary and wages expenses
substantiation
work-related expenses

Legislative References:
ITAA 1997 Div 28
ITAA 1997 Subdiv 28-D

FOI number: I 1018380