Commonwealth Numbered Regulations - Explanatory Statements

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INCOME TAX ASSESSMENT AMENDMENT REGULATIONS 1999 (NO. 1) 1999 NO. 12

STATUTORY RULES 1998 NO. 12

Issued by the Authority of the Assistant Treasurer

Income Tax Assessment Act 1997

Income Tax Assessment Amendment Regulations 1999 (No. 1)

The Governor-General may make regulations under section 909-1 of the Income Tax Assessment Act 1997 (the 1997 Act) for the purposes of that Act.

Purpose

The purpose of the regulations is to insert into the Income Tax Assessment Regulations, specifically regulation 28-25.01, for the purposes of Division 28 of the 1997 Act, the 'cents per kilometre' rates for use in calculating a deduction for car expenses for the 1998-99 income year.

The regulations are also used to calculate the taxable value of a number of fringe benefits that relate to motor vehicles (such as remote area holiday travel) provided in the fringe benefits tax year ending 31 March 1999.

This is achieved by the employer using the rates in the proposed regulations for the purposes of determining the amount of reimbursement to the employee where, for example, the employee has used his or her own vehicle for the holiday travel.

Background

Division 28 of the 1997 Act outlines four methods for taxpayers to calculate the amount of deduction they can claim for car expenses. If a taxpayer does not wish to claim for more than the first 5,000 kms of the income-producing use of a car owned or leased by the taxpayer, he or she can elect to claim a deduction for car expenses using the 'cents per kilometre' method out in section 28-25. That is, the deduction is calculated by multiplying the number of business kilometres by the prescribed rate applicable to the car's engine capacity.

If a taxpayer wishes to claim for more than 5,000 kms of the income-producing use of a car owned or leased by the taxpayer, he or she must use one of the other three methods outlined in Division 28 of the 1997 Act.

Since the 1986-1987 income year, the rates in the Regulations (formerly in the 1936 Act Regulations) have followed the rates of motor vehicle allowance for the Commonwealth Public Service set out by the Department of Employment, Workplace Relations and Small Business (formerly the Department of Industrial Relations). The rates are updated each year.

The updated rates produced by the Department of Employment, Workplace Relations and Small Business are lower than the rates stated in the Assistant Treasurer's Press Release No AT/020 of 15 May 1998. Accordingly, the rates will remain the same as those for the year ended 30 June 1998.

This will ensure taxpayers do not face a higher than expected income tax liability on allowances they receive based on the published rates. It will also ensure that taxpayers will not face higher than expected FBT liabilities in respect of motor vehicle allowance and reimbursement payments they may have made.

The regulations commenced on gazettal.