The ATO has reminded taxpayers that, in relation to claiming car expenses, the one-third of actual expenses method and 12% of original value method were abolished from 1 July 2015. The cents per kilometre method now uses a standard rate of 66 cents per kilometre for all cars, rather than a rate based on a car’s engine size.

Employers should be aware that the ATO set the approved pay as you go (PAYG) withholding rate for cents per kilometre car allowances at 66 cents per kilometre from 1 July 2015. Employers should withhold tax from any amount above 66 cents for all future payments of a car allowance, as failure to do so may result in the employee having a tax liability when they lodge their tax return. Employees, who from 1 July 2015 have been paid a car allowance at a rate higher than the newly approved amount, should consider whether they need to increase their withholding to avoid any tax liability at the end of the year.

Editor: If this applies to your business, please contact our office if you need help with the calculations.

The parties disagreed, however, as to whether an amount of $1.14 million shown as a loan in the 2008 balance sheet of the taxpayer’s trust should be included as an asset – the taxpayer claimed that he was “statute-barred” from recovering the loan by the Limitation of Actions Act 1936 (SA).

If it was an asset, then the net value of the total assets for the purposes of the small business exemption exceeded $6 million, and the taxpayers were not entitled to CGT relief.

Decision

The Federal Court held that any action by the trust against the taxpayer to recover the pre-1998 loan would be an action to recover “trust property”, and the Limitation of Actions Act does not prescribe any limitation period in respect of claims of that kind. Therefore, “the contention that the pre‑1998 loan was statute‑barred and did not have to be brought into account in the calculation of the MNAVT must be rejected”.