EXPLANATORY STATEMENT
STATUTORY RULES 1989 NO. 124
ISSUED BY THE AUTHORITY OF THE TREASURER
The purpose of these regulations is to set the rates at which a taxpayer will be entitled to claim income tax deductions on a cents per kilometre basis for car expenses for the year of income commencing on 1 July 1988.
Section 82KX of the Income Tax Assessment Act 1936 enables a taxpayer to elect an arbitrary basis of deduction 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 engine type and size of the car, expressed in cubic centimetres. These regulations prescribe the relevant rates.
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 1989.
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 do they impose any liability on such a person.
Accordingly, the regulations amend Schedule 8 of the Income Tax Regulations by inserting, after Part II, new Part III. The new Part III of the Schedule sets the car expense deduction rates for the year of income commencing on 1 July 1988 and ending on 30 June 1989.