Income Tax Regulations (Amendment) 1993 No. 65
EXPLANATORY STATEMENT
STATUTORY RULES 1993 No. 65
ISSUED BY THE AUTHORITY OF THE TREASURER
Income Tax Assessment Act 1936
Income Tax Regulations (Amendment)
These regulations amend the Income Tax Regulations by inserting a new Part 7 at the end of Schedule 6.
Section 82KX of the Income Tax Assessment Act 1936 (the Act) enables a taxpayer to elect an arbitrary basis of deduction under that section in relation to a car that is owned or leased by the taxpayer and used for the purpose of producing assessable income, where the number of kilometres travelled for that purpose is not more than 5,000 in a year of income.
The deduction allowable under section 82KX is equal to the number of business kilometres multiplied by the prescribed rate of cents per kilometre applicable to the car's engine type and size, expressed in cubic centimetres.
The purpose of the regulations is to prescribe the relevant rates for the purposes of section 82KX of the Act that are to apply for the year of income commencing 1 July 1992.
The regulations are also used to calculate the taxable value of a number of fringe benefits (such as remote area holiday travel) provided in the fringe benefits tax year ended 31 March 1993.
The prescribed rates are based on the private motor vehicle allowance rates payable to members of the Australian Public Service.
The regulations do not affect the rights of any person (other than the Commonwealth) in a manner prejudicial to that person, nor will they impose any liability on such person.
Accordingly, the regulations amend Schedule 6 of the Income Tax Regulations by inserting new Part 7 after Part 6. The new Part 7 of the Schedule sets out the car expense deduction rates for the year of income commencing 1 July 1992.
Overview
The Income Tax Regulations (Amendment) 1993 No. 65, issued under the authority of the Treasurer, amends the Income Tax Regulations by introducing a new Part 7 at the end of Schedule 6. This amendment is in response to the need for specific regulations regarding the deduction rates applicable to the use of motor vehicles for business purposes under section 82KX of the Income Tax Assessment Act 1936. The objective of these regulations is to establish the prescribed rates for the year of income commencing 1 July 1992, ensuring taxpayers can accurately calculate their deductions for business kilometres travelled by their cars, which is limited to 5,000 kilometres in a year of income. These rates are derived from the private motor vehicle allowance rates for members of the Australian Public Service and are designed to align with the legislative intent of providing a fair and consistent method for taxpayers to claim these deductions.
Scope and Application
The Income Tax Regulations (Amendment) 1993 No. 65, issued under the authority of the Treasurer, amends the Income Tax Regulations by inserting a new Part 7 into Schedule 6. This amendment is specifically aimed at taxpayers who own or lease a car used for the purpose of producing assessable income, with business kilometres travelled not exceeding 5,000 in a year of income. The regulations are designed to facilitate an arbitrary basis of deduction under section 82KX of the Income Tax Assessment Act 1936, by prescribing the rates applicable to the number of business kilometres multiplied by the prescribed rate of cents per kilometre, which varies based on the car's engine type and size. These regulations apply to the year of income commencing 1 July 1992 and are used to calculate the taxable value of certain fringe benefits provided in the fringe benefits tax year ended 31 March 1993. The prescribed rates are based on the private motor vehicle allowance rates applicable to members of the Australian Public Service. The regulations do not prejudice the rights of any person, nor do they impose any liability on persons other than the Commonwealth.
Key Provisions
The main operative sections of these regulations (Schedule 6 Part 7) provide the specific rates for the car expense deduction allowable under section 82KX of the Income Tax Assessment Act 1936. This section allows a taxpayer to elect an arbitrary basis of deduction for a car used for producing assessable income, provided the kilometres travelled for that purpose do not exceed 5,000 in a year of income. The deduction is calculated by multiplying the number of business kilometres by the prescribed rate of cents per kilometre, based on the car’s engine type and size (s. 82KX). The regulations specify these rates for the year of income commencing 1 July 1992, setting out a detailed table of rates in Part 7 of Schedule 6.
The regulations impose certain obligations on taxpayers who wish to claim a deduction under section 82KX. They must ensure that the car in question is used for the purpose of producing assessable income and that the total kilometres travelled for that purpose do not exceed the 5,000-kilometre limit in a year. Additionally, taxpayers must accurately calculate their deduction by multiplying the number of business kilometres by the prescribed rate, which corresponds to the car's engine type and size as listed in the regulations. Failure to adhere to these requirements could result in an incorrect deduction, potentially leading to reassessment by the Australian Taxation Office.
There are no explicit offences, penalties, or civil/criminal consequences mentioned in the explanatory statement for breaches of these regulations. However, it is important to note that any incorrect claim for a deduction under section 82KX could result in penalties under the general provisions of the Income Tax Assessment Act 1936. These penalties could include interest on any underpaid tax, general interest charges, and penalties for negligence or fraud, which can vary depending on the circumstances of the breach. The maximum penalties for serious tax offences, such as fraud, can be significant, including substantial fines and imprisonment.