Commonwealth Numbered Regulations - Explanatory Statements

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Issued by authority of the Minister for Revenue and Assistant Treasurer

Income Tax Assessment Act 1997

Income Tax Assessment Amendment Regulations 2002 (No. 1)

The Governor-General may make regulations under section 909-1 of the Income Tax Assessment Act 199 7 (the Act) prescribing matters that the Act requires or permits to be prescribed or are necessary or convenient to prescribe for carrying out or giving effect to this Act.

The purpose of these regulations is to insert in Part 2 of Schedule 1 of the Income Tax Assessment Regulations 1997 (the Regulations) the "cents per kilometre" rates for calculating deductions for car expenses for the 2001-2002 income year.

The number of cents used in the "cents per kilometre" method are set out in Part 2 of Schedule 1 to the Regulations. The rates currently prescribed apply only up to and including the 20002001 financial year.

Division 28 of the Act outlines the four methods for calculating deductions for motor vehicle expenses. To calculate the deduction under the "cents per kilometre" method (Section 28-25), the number of business kilometres the car travelled during the year of income is multiplied by a specified number of cents. The cents per kilometre rate is determined in relation to the car's engine capacity and is prescribed in the regulations. This method can be used for the first 5,000 business kilometres only. If a taxpayer wishes to claim for more than 5,000 business kilometres, he or she must use one of the other methods outlined in Division 28 of the Act.

Since the 1986-1987 financial year, the rates in the Regulations have followed the rates of motor vehicle allowance for the Commonwealth Public Service set out by the Department of Employment and Workplace Relations. The rates are revised each year and the ones currently prescribed apply only up to and including the 2000-2001 financial year.

The new rates for the 2001T2002 income year are as follows:


    Engine capacity of car    
    not powered by a
    rotary engine (cubic

    Engine capacity of car    
    powered by a rotary
    engine (cubic

    Rate per

    Small car

    Not exceeding 1600cc

    Not exceeding 800cc


    Medium car

    Exceeding 1600cc but
    not exceeding 2600cc

    Exceeding 800cc but not
    exceeding 1300cc


    Large car

    Exceeding 2600cc

    Exceeding 1300cc


The Regulations are also relevant for the purposes of the Fringe Benefits Tax Assessment Act 1986 (FBTAA). The definition of "basic car rate" in subsection 136(1) of the FBTAA provides that the rate is the same as that prescribed for the purposes of section 28-25 of the ITAA 1997. "Basic car rate" is used in the calculation of the taxable values of a number of fringe benefits.

Details of the Regulations are as follows:

Regulation 1: Names the Regulations.

Regulation 2: Provides that the Regulations commenced on gazettal.

Regulation 3: Provides that Schedule 1 amends the Regulations to insert the rates for the 20012002 year of income.

Schedule 1: This inserts item 5, the "cents per kilometre" rate for the 2001-2002 income year, into Regulation 28-25.01 of the Regulations for the purposes of Division 28 of the Act.

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