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_Bradley1234(Newbie)Newbie
11 Mar 2021

My question refers to the following statements found in the hyperlink below:

https://www.ato.gov.au/business/personal-services-income/in-detail/claiming-deductions-when-receiving-psi/?page=3

In the hyperlinked page above under the Car expenses heading i found the paragraph:

The PSI rules add a special rule for businesses with motor vehicle expenses, specifically for cars. If your personal services are contracted through a company, partnership or trust that is subject to the PSI rules, your business is only allowed to claim expenses (including FBT payments) for one car if the car is used for private purposes.

In the same hyperlinked page I found the paragraph:

If the PSI is earned through a company, partnership or trust, the business reduces the amount of PSI that it attributes to an individual by the amount of the deductions.

Context:

I work through my own Pty Ltd company, I am the only employee (and also its only director) and PSI rules apply to this company. The company has a car in its name which it leases to me (the employee). Since I drive the car from my garage to the same workplace carpark everyday, the car is used 100% for private use always.

Question:Based on the above copied paragraphs from the ATO website, am i right in assuming I (the employee) can reduce my taxable income (PSI the company attributed to me) by claiming company car expenses such as depreciation?

If the answer is no, could you please explain why. Thank you so much.

2,378 views
5 replies
2,378 views
5 replies

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Most helpful reply

AriATO(Community Support)Community Support
16 Mar 2021

Hi @Bradley1234

Essentially yes. The PSI attributed to you will be reduced by the amount of deductions claimed. Car expenses do include depreciation.

You can read more about car expenses on our website.

Ari

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Most helpful reply

AriATO(Community Support)Community Support
16 Mar 2021

Hi @Bradley1234

Essentially yes. The PSI attributed to you will be reduced by the amount of deductions claimed. Car expenses do include depreciation.

You can read more about car expenses on our website.

Ari

RD2(Initiate)Initiate
10 June 2021

Hi,

Mine is also in a similar situation as above.

Can I confirm

  1. Is the travel from home garage to workplace parking (as above) be considered business travel (Since PSI) or personal travel.
  2. If it is personal travel, does the deductions needs to apportioned accordingly. ie. since 100% personal then, no deductions allowed.
  3. If business travel, would there any implication of FBT. Do we need to use Operating cost method. Again, what % is business/personal.
  4. Do we need to maintain log book.

Thanks in advance

BlakeATO(Community Support)Community Support
14 June 2021

Hi @RD2

Travel from home to your workplace is almost always considered private travel, regardless as to what type of income you're earning.

This means the deductions must be reduced by the private travel portion.

Where you give benefits to an employee, director, or beneficiary of a trust, such as the use of a work vehicle, FBT will arise. For benefits that would have been deductible to the recipient had they paid themselves (such as allowable work travel deductions), there is no fringe benefit. We call these exempt benefits.

You can use whichever method you like. The only exception to this is if you didn't keep the required evidence for the operating cost method (like logbooks). If you don't have sufficient records, you must use the statutory formula method.

You must maintain a logbook to use the operating cost method. The statutory method will allow you to use other evidence to substantiate your claims.

You can read more about trips between home and work, Working out the taxable value of a car fringe benefit and Record keeping for cars for FBT on our website

Jimbo890(I'm new)I'm new
5 Jan 2023

Hi,


I'm looking to clarify one aspect of the reply to the original question. Bradley1234 indicated the vehicle is used 100% for private use. A later reply suggested that any deductions still had to be reduced by the private use portion (i.e. that could mean there would be no deductions permissible in their case since there was 0% business use). 


However, as per the example under section 86-70 , it is suggested that all of the car expenses can be deducted for 1 vehicle that is used for private purposes.


There is a similar example that also suggests all expenses can be deducted when an employee or associate has mixed business/private usage here: https://www.ato.gov.au/Business/Income-and-deductions-for-business/Deductions/Deductions-for-motor-vehicle-expenses/Motor-vehicles-used-by-your-employees/


So my question is:


Does a single vehicle being used subject to 86-70(2) still need the deductions to be apportioned between private/business usage, or are all of that vehicles' expenses deductible in this instance regardless of usage, as seems to be implied in the above rules and examples?


Thanks.

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