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Is the taxpayer entitled to claim a deduction for car expenses using the cents per kilometre method for 1500 kilometres work related travel and 5000 kilometres for business travel under section 28-12 of the Income Tax Assessment Act 1997 (ITAA 1997)?

No, the taxpayer is not entitled to claim a deduction for car expenses using the cents per kilometre method for 1500 kilometres work related travel and 5000 kilometres for business travel under section 28-12 of the ITAA 1997, but can claim a deduction for the first 5000 kilometres only.

The taxpayer used the same car for employment related travel and travel in relation to their own business.

The taxpayer travelled 1500 kilometres in the course of their employment and 5000

kilometres in the course of carrying on their business.

Section 28-12 of the ITAA 1997 provides that a deduction for car expenses can be made by using one of 4 methods. The cents per kilometre method is contained in Subdivision 28-C of the ITAA 1997.

In calculating the amount of the deduction under section 28-25 of the ITAA 1997, the number of business kilometres is limited to the first 5000. Any business kilometres travelled in excess of 5000 is disregarded. Business kilometres are kilometres that are travelled in the course of producing assessable income. No distinction is made between different sources of income which make up a taxpayer's assessable income.

The maximum number of kilometres the taxpayer can use to claim a deduction using the cents per kilometre method is therefore 5000 kilometres.