Taxation Determination

TD 2007/22

Income tax: what is the car limit for the 2007-2008 financial year?

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This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953. A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. If you rely on this ruling, we must apply the law to you in the way set out in the ruling (unless we are satisfied that the ruling is incorrect and disadvantages you, in which case we may apply the law in a way that is more favourable for you - provided we are not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you.

Ruling

1. The car limit for the 2007-2008 financial year is $57,123.

Example

2. On 9 July 2007 a taxpayer purchases a motor vehicle for $65,000 wholly for use in carrying on their business. In working out the vehicle's decline in value they may deduct for the 2007-2008 income year, the first element of cost of the vehicle is reduced to $57,123.

Date of effect

3. This Determination applies for the financial year commencing on 1 July 2007.

Commissioner of Taxation
27 June 2007

Appendix 1 - Explanation

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

Explanation

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

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

6. For the 2005-2006 year the index was 395.4 and for the 2006-2007 year the index was 396.3, resulting in an indexation factor of 1.002. As a result the car limit for the 2007-2008 financial year increases to $57,123.

Footnotes

[1]
1 Section 40-230 of the Income Tax Assessment Act 1997. The 'car limit' is also used to set the luxury car threshold and is used to determine if luxury car tax is payable - see Luxury Car Tax Determination LCTD 2007/1.

Not previously issued as a draft

References

ATO references:
NO 2006/10715

Previous Rulings/Determinations:
TD 2004/18
TD 2004/27
TD 2005/30
TD 2006/44

ISSN: 1038-8982

Related Rulings/Determinations:

LCTD 2007/1

Subject References:
car limit
decline in value

Legislative References:
TAA 1953
ITAA 1997 40-230

TD 2007/22 history
  Date: Version: Change:
You are here 27 June 2007 Original ruling  
  25 May 2016 Withdrawn  

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