Income Tax Regulations (Amendment)

Overview

The Income Tax Regulations (Amendment) 1992 No. 129, issued by the authority of the Treasurer, was enacted to address a specific gap in the Income Tax Assessment Act 1936 by allowing taxpayers to elect an arbitrary basis of deduction for car expenses used for producing assessable income. This was particularly relevant for taxpayers who travel less than 5,000 kilometres per year for business purposes. The regulations were introduced to prescribe the rates applicable for the deduction allowable under section 82KX of the Act, ensuring that the rates are consistent with those payable to members of the Australian Public Service. The policy objective was to maintain fairness and consistency in the tax system by aligning the prescribed rates for car expenses with those of public service employees. These regulations also facilitated the calculation of the taxable value of certain fringe benefits provided in the specified fringe benefits tax year.

Scope and Application

The Income Tax Regulations (Amendment) 1992 No. 129 applies to taxpayers who are eligible to claim deductions under section 82KX of the Income Tax Assessment Act 1936. This provision allows for a deduction related to the use of a car for producing assessable income, provided the car is owned or leased by the taxpayer and the business kilometres travelled do not exceed 5,000 in a year of income. The regulations specifically prescribe the rates applicable for calculating these deductions based on the engine type and size of the car, expressed in cubic centimetres. These rates are set according to the private motor vehicle allowance rates applicable to members of the Australian Public Service. The regulations do not prejudice the rights of any person except the Commonwealth and do not impose any liability on such persons. Additionally, these regulations also address the taxable value of certain fringe benefits provided in the fringe benefits tax year ended 31 March 1992. The regulations extend the application of the Act by amending the Income Tax Regulations through the insertion of a new Part 6, which details the car expense deduction rates for the relevant year of income.

Key Provisions

The primary operative sections of the Income Tax Regulations (Amendment) 1992 No. 129 involve the insertion of a new Part 6 into Schedule 6 of the Income Tax Regulations. This new Part 6 sets out specific rates for car expense deductions under section 82KX of the Income Tax Assessment Act 1936. Section 82KX allows taxpayers who own or lease a car and use it for producing assessable income, with business kilometres not exceeding 5,000 per year, to elect an arbitrary basis of deduction. The deduction is calculated by multiplying the number of business kilometres by the prescribed rate in cents per kilometre, which is determined by the car's engine type and size. These regulations impose several obligations on taxpayers and entities governed by them. For instance, taxpayers who qualify under section 82KX must ensure that the car's usage for business purposes does not exceed 5,000 kilometres in a year. They must also calculate their deductions accurately using the prescribed rates outlined in the new Part 6 of Schedule 6. Furthermore, taxpayers need to keep accurate records of the kilometres travelled for business purposes to substantiate their deductions when required by the tax authorities. The amendments also introduce specific consequences for non-compliance with the new regulations. While the text does not explicitly state offences, penalties, or civil/criminal consequences, the general framework of the Income Tax Assessment Act 1936 implies that failure to comply with these provisions could result in penalties. Such penalties may include fines or other financial penalties, as well as potential audits or investigations by the Australian Taxation Office. The exact penalties would depend on the nature and extent of the non-compliance, as outlined in the broader provisions of the Income Tax Assessment Act.