Commonwealth Numbered Regulations - Explanatory Statements

[Index] [Search] [Download] [Related Items] [Help]

INCOME TAX ASSESSMENT REGULATIONS (AMENDMENT) 1998 NO. 85

STATUTORY RULES 1998 NO. 85

Issued by the Authority of the Assistant Treasurer

Income Tax Assessment Act 1997

Income Tax Assessment Regulations (Amendment)

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.

Division 28 of to 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 =payer 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.

Division 28, as indeed the whole of the 1997 Act, applies for the 1997-98 and later years of income. Consequently, these rates have not been regulated previously. However, regulations have been made annually since 1986-87 and prescribed by regulation 147 and Schedule 6 of the Income Tax Regulations for the purposes of the former versions of Division 28, Schedule 2A and Division 3 of Part 3 of the Income Tax Assessment Act 1936.

The purpose of the proposed regulations is to insert into the Income Tax Assessment Regulations 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 1997-98 income year.

The regulations will also be 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 1998.

The Regulations are amended as follows:

Regulation 1 provides that the proposed regulations will commence on gazattal.

Regulation 2 provides for the amendment of the Regulations.

Regulation 3 inserts new regulation 28-25.01 setting out the prescribed rates for the year commencing 1 July 1997.

Having the regulations take effect after the close of the fringe benefits tax year is not in breach of section 48 of the Acts Interpretation Act 1901 which prevents retrospective operation of an amendment if it will be disadvantageous to a person. The rates are used in the calculation of the taxable value of a small number of miscellaneous fringe benefits to reduce their taxable value. This has the effect of reducing the fringe benefits tax otherwise payable which can only be beneficial to taxpayers subject to fringe benefits tax.