Commonwealth Numbered Regulations - Explanatory Statements

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INCOME TAX ASSESSMENT AMENDMENT REGULATIONS 2003 (NO. 2) 2003 NO. 40

STATUTORY RULES 2003 No. 40

Issued by authority of the Minister for Revenue and Assistant Treasurer

Income Tax Assessment Act 1997

Income Tax Assessment Amendment Regulations 2003 (No. 2)

Section 909-1 of the Income Tax Assessment Act 1997 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

The purpose of these regulations is to insert the 'cents per kilometre' rates for calculating deductions for car expenses for the 2002-2003 income year in Part 2 of Schedule 1 to the Income Tax Assessment Regulations 1997 (the Regulations).

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 2001-2002 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 2001-2002 financial year.

The new rates for the 2002-2003 income year are as follows:

Description	Engine capacity of car   not powered by a   rotary engine (cubic   centimetres	Engine capacity of car   powered by a rotary   engine (cubic   centimetres	Rate per   kilometre      (cents)
Small car	Not exceedin 1600cc	Not exceedin 800cc	50
Medium car	Exceeding 1600cc but       not exceedin 2600cc	Exceeding 800cc but not       exceeding 1300cc	60
Large car	Exceeding 2600cc	Exceeding 1300cc	61

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 2002-2003 year of income.

Schedule l: This inserts item 5, the 'cents per kilometre' rate for the 2002-2003 income year, into Regulation 28-25.01 of the Regulations for the purposes of Division 28 of the Act.

The Regulations commenced on gazettal.