Income Tax Assessment (Cents per Kilometre Deduction Rate for Car Expenses) Determination 2024

Administered by Department of the Treasury

Legislation au F2024L00697 Not in force Legislative Instrument

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Explanatory Statement

Income Tax Assessment (Cents per Kilometre Deduction Rate for Car Expenses) Determination 2024

 

 

General outline of instrument

  1.                This instrument is made under subsection 28-25(4) of the Income Tax Assessment Act 1997 (the Act).
  2.                The instrument sets the rate at which work-related car expense deductions may be claimed in an income year when using the cents per kilometre method. The Commissioner of Taxation has determined the rate to be 88 cents per kilometre for the income year commencing 1 July 2024 (and subsequent income years, until such time as the instrument is repealed or varied).
  3.                The instrument is a legislative instrument for the purposes of the Legislation Act 2003.
  4.                Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws) the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.

 

Date of effect

5.                  This instrument commences on 1 July 2024.

 

Effect of this instrument

6.                  This instrument varies the cents per kilometre deduction rate for car expenses to 88 cents per kilometre (the previous rate was 85 cents per kilometre).

7.                  This rate will remain applicable until the Commissioner determines that it should be varied.

8.                  This instrument ensures that taxpayers and tax practitioners have certainty about the rate at which work-related car expense deductions may be claimed using the cents per kilometre method.

 

Compliance cost assessment

9.                  Compliance cost impact: Minor – there is no or minimal impact as the legislative instrument is minor and machinery in nature – OIA24-07387.

 

Background and methodology

10.              This instrument has been developed to ensure that the rate for claiming work-related car expense deductions using the cents per kilometre method is updated to reflect recent average operating costs for cars. The rate has been updated in accordance with the annual movement of the Private Motoring Subgroup of the consumer price index (CPI), rounded to the nearest whole cent within the year.

11.              The latest Private Motoring Subgroup of the CPI numbers can be obtained from the Australian Bureau of Statistics website for the latest CPI release, by downloading Table 7 and looking for the series Index Numbers; Private motoring; Australia (series ID A2326656J).

12.              Subsection 28-25(4) of the Act enables the Commissioner to determine rates of cents per kilometre for cars (as defined in subsection 995-1(1) of the Act) for an income year.

13.              Subsection 28-25(5) of the Act requires the Commissioner, when determining the rate, to have regard to the average operating costs for the cars to be covered by that rate.

14.              To take into account variation within the year, the average index of the 4 most recent quarters for which data is available is used.

15.              The indexation factor is the ratio of the average index of the 4 most recent quarters with that of the previous year.

16.              After applying the indexation factor to the published rate for the 2023–24 income year of 85 cents per kilometre, the Commissioner has determined that the rate of 88 cents per kilometre will apply for the income year commencing from 1 July 2024 (and subsequent income years, until such time as the instrument is repealed or varied).

 

Consultation

17.              For this instrument, broad public consultation was undertaken for a period of 3 weeks to 22 May 2024.

18.              The draft instrument and draft explanatory statement were published to the ATO Legal database. Publication was advertised via the ‘What’s new’ page on that website, and via the ‘Open Consultation’ page on ato.gov.au. Major tax and superannuation publishers and associations monitor these pages and include the details in the daily and weekly alerts and newsletters to their subscribers and members. This ensures advice about the draft is disseminated widely across the tax professional community, and that they are in an informed position to provide comments and feedback.

19.              No comments were received as a result of consultation.

 

 

 

Legislative references

Acts Interpretation Act 1901

Human Rights (Parliamentary Scrutiny) Act 2011

Income Tax Assessment Act 1997

Legislation Act 2003

 


Statement of compatibility with human rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Income Tax Assessment (Cents per Kilometre Deduction Rate for Car Expenses) Determination 2024

This legislative instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview of the legislative instrument

This instrument sets the rate at which work-related car expense deductions may be claimed in an income year when using the cents per kilometre method.

 

Human rights implications

This legislative instrument does not engage any of the applicable rights or freedoms as it simply sets the rate at which work-related car expense deductions may be claimed in an income year when using the cents per kilometre method.

 

Conclusion

This legislative instrument is compatible with human rights as it does not raise any human rights issues.

Overview

The Income Tax Assessment (Cents per Kilometre Deduction Rate for Car Expenses) Determination 2024 was enacted under subsection 28-25(4) of the Income Tax Assessment Act 1997 to address the need for updating the rate at which work-related car expense deductions can be claimed using the cents per kilometre method. This instrument, made by the Commissioner of Taxation, sets the rate to 88 cents per kilometre for the income year starting 1 July 2024 and subsequent years, ensuring taxpayers and tax practitioners have certainty about the deduction rate. The rate was determined by considering the annual movement of the Private Motoring Subgroup of the Consumer Price Index (CPI), reflecting recent average operating costs for cars. This determination aims to align the deduction rate with current economic conditions, thereby maintaining fairness and accuracy in the tax system.

Scope and Application

The Income Tax Assessment (Cents per Kilometre Deduction Rate for Car Expenses) Determination 2024 applies to individuals and entities that are taxpayers in Australia, specifically those claiming work-related car expenses using the cents per kilometre method for income tax purposes. The determination sets the rate at which these deductions can be claimed, thereby impacting the amount that can be deducted for car expenses incurred in the course of employment or for business activities. The instrument is applicable nationally and is made under the authority of the Income Tax Assessment Act 1997, which governs the imposition and collection of income tax in Australia. It applies from 1 July 2024 onwards, and the rate of 88 cents per kilometre will remain in effect for subsequent income years unless altered by the Commissioner of Taxation. The determination does not specify any exclusions or exemptions, but the general principles of the Income Tax Assessment Act 1997 apply to all taxpayers who seek to claim work-related car expenses. The rate is indexed annually based on the average operating costs for cars, as reflected in the Private Motoring Subgroup of the consumer price index, ensuring it remains aligned with economic realities.

Key Provisions

The Income Tax Assessment (Cents per Kilometre Deduction Rate for Car Expenses) Determination 2024 (the Determination) sets out the rate at which work-related car expense deductions may be claimed under the cents per kilometre method for income years commencing on 1 July 2024. This rate has been set by the Commissioner of Taxation at 88 cents per kilometre, effective from 1 July 2024 (subsection 6). This rate applies until the Commissioner determines it should be varied (subsection 7). The Determination was made under subsection 28-25(4) of the Income Tax Assessment Act 1997 (the Act) and varies the previous rate of 85 cents per kilometre. The new rate was determined by taking into account the average operating costs of cars, as measured by the Private Motoring Subgroup of the consumer price index (CPI), and rounding the result to the nearest whole cent (subsection 10 and 16). Under this Determination, taxpayers and tax practitioners must use the rate of 88 cents per kilometre when claiming work-related car expenses for the specified income years. This involves calculating the total number of kilometres driven for work purposes and multiplying this by the rate of 88 cents per kilometre. The obligation to use this rate applies to all taxpayers who claim car expenses as deductions under the cents per kilometre method, ensuring consistency and accuracy in the deduction amounts claimed. The Determination also requires the Commissioner to continue to review and, if necessary, adjust the rate based on updated CPI data, to reflect changes in the operating costs of cars over time. The Determination does not create any specific offences or penalties for its breach, as it primarily serves to set a rate for calculating deductions. However, taxpayers who do not adhere to the correct rate set by this Determination when claiming deductions may face scrutiny from the Commissioner of Taxation, potentially leading to audits and the requirement to adjust their tax returns. Failure to accurately claim deductions could result in additional tax liabilities, interest, and penalties under the general provisions of the Income Tax Assessment Act 1997. It is important for taxpayers and tax practitioners to ensure compliance with the rate specified in the Determination to avoid any adverse consequences.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.