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ATO: renting multiple cars

WestSydGuy

Well-Known Member
ATO gurus please advise. I own a car and scooter, the car is used for some work trips and mostly private use, the scooter also. For Uber I rented a car for 4 weeks, then returned it. I intend on claiming the work trips, logged as per work events/calendar, on my private vehicle.

I did keep a logbook for the 4 weeks, however the ATO mention a minimum of 12 weeks. Also, I’m intending on renting this year, vehicles for 2-3 weeks, so I won’t get 12 weeks of logbook for a single vehicle. Do I claim the kilometres (up to 5000) for each vehicle? The last Uber vehicle I rented covered around 2500km, in 4 weeks, 100% business usage.

Q. How would the ATO expect us to treat these short term rented vehicles in terms of reporting?

Q2. If using the upto 5000km/66c method, is petrol/rental fees/tolls not permitted as a deduction?

Jack Malarkey your guidance is greatly desired please, not personal advise of course.
 

Jack Malarkey

Well-Known Member
WestSydGuy, I can now answer your questions.

1. I am assuming that your scooter is a type of motor cycle (say, a Vespa or similar) and not some form of small scooter you stand up on.

2. The substantiation rules for car expenses are in Division 28 of the Income Tax Assessment Act 1997.

3. These provisions are not as difficult to understand as you might think and I would commend a reading of the legislation itself. You can access Division 28 by using this link: http://www5.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/.

4. The substantiation rules apply only to cars that you own, lease or hire. They do not apply to motor cycles.

5. If the substantiation provisions don’t apply to a particular car or other vehicle, you need to calculate the deductions under the ordinary principles governing deductions, including for apportioning expenses that are only partly for business.

6. The car substantiation reqirements also do not apply to a car used 100% in the course of, or incidental to, producing your assessable income or for private travel by you or someone else that is only minor, infrequent and irregular (sections 28-170 and 28-175).

7. If a car subject to the substantiation rules is owned, leased or hired for less than 12 weeks and you wish to use the log book method, you need to keep the log book for the whole period you held the car rather than for at least 12 weeks (subsection 128-120(1)).

8. The substantiation requirements don’t apply to a car ‘on hire intermittently, as the occasion requires, on an hourly, daily, weekly or short term basis’ unless the successive hires of that car ‘result in a substantial continuity’ of that car being hired (section 28-165).

9. Note the requirement that the car is on hire ‘intermittently’. The ordinary meaning of ‘intermittent’ (from which the adverb ‘intermittently’ derives) is ‘occurring at irregular intervals, not continuous or steady’.

10. Successive hires of even different cars would be likely to prevent the hire from being ‘intermittent’.

11. If you use the cents per kilometre method for a car rather than the log book method, you cannot claim separately any other expenses for the car including fuel, servicing, repairs, hire charges or depreciation.

12. The Australian Taxation Office hasn’t provided any administrative guidance for income tax purposes on claiming motor cycle expenses on a cents per kilometre basis outside the substantiation rules.

13. It has, however, in Taxation Determination TD 2018/4 indicated it will accept 16 cents per kilometre for a motor cycle for fringe benefits tax purposes: see https://www.ato.gov.au/law/view/pdf/pbr/td2018-004.pdf.

14. You may well be able to persuade the Tax Office to adopt that same rate for income tax purposes under the ordinary principles governing deductions.

15. Please come back to me if any part of this explanation is unclear or I can help further.
 
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WestSydGuy

Well-Known Member
  • Thread Starter Thread Starter
  • #4
Yes, it’s a motorcycle, a Vespa. Around 400km would be for work trips, non commuting work travel.

(I do also have a stand up push scooter, but mostly for scooting around the house with my daughters push scooter. I won’t be claiming any mileage from the push scooter to the ATO. )
 

Jack Malarkey

Well-Known Member
If using the upto 5000km/66c method, is petrol/rental fees/tolls not permitted as a deduction?
I should have mentioned in my earlier answer that tolls (but not the other expenses you mention) remain separately deductible if you use the cents per kilometre method. This is because tolls aren’t a car expense as such.
 
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Jack Malarkey

Well-Known Member
Could you clarify the 100% part of (6) please?
Thanks, gustavusadolphus, for your question.

Here’s paragraph 6 from my earlier reply:

‘6. The car substantiation reqirements also do not apply to a car used 100% in the course of, or incidental to, producing your assessable income or for private travel by you or someone else that is only minor, infrequent and irregular (sections 28-170 and 28-175)’.

The 100% requirement requires that you never use the car for anything but for business purposes. So if you even just once use the car, say, to drive to the shops to buy some milk, you won’t meet the 100% requirement.

This requirement, however, needs to be read with the immediately following part of the exemption that allows for private travel by you (or someone else) that’s only minor, infrequent and irregular.

Perhaps my explanation would have been a little clearer if I hadn’t followed the structure of the legislation so closely and I had written:

‘The car substantiation requirements also don’t apply to a car if any private travel by you (or someone else) is only minor, infrequent and irregular’.

Note that any private travel must be minor AND it must be infrequent AND it must be irregular for this exemption to apply.

I would recommend keeping a log book for the relevant minimum period if there’s any doubt whether these exemption requirements have been met.

I tailored my reply to the particular circumstances of WestSydGuy.

It’s worth reading sections 28-170 in its entirety to gain a full understanding of its scope: https://iknow.cch.com.au/document/atagUio695007sl24354979/section-28-170-exception-for-particular-cars-used-in-particular-ways.

(Section 28-175 applies section 28-170 to depreciation deductions.)

The Australian Taxation Office tends not to refer to these exemptions in their guidance material so it’s important that drivers be aware of their existence (and limitations).
 
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