Section DE 2 — Income Tax Act 2007: Deductions for business use

DE 2 Deductions for business use Deduction (1) A person is allowed a deduction for— (a) expenditure that they incur for the business use of a motor vehicle: (b) an amount of depreciation loss for the business use of a motor vehicle. Amount, and timing, of deduction: expenditure (2) The amount of the deduction allowed in an income year for the expenditure for the business use of the vehicle is calculated using the formula— expenditure × business proportion. Definition of item in formula (3) In the formula in subsection (2), business proportion is the proportion of business use of the motor vehicle for the income year, expressed as a decimal, calculated under sections DE 3 to DE 12 . Amount, and timing, of deduction: depreciation loss (4) The amount of the deduction allowed in an income year for the amount of depreciation loss for the business use of the vehicle is calculated— (a) using the formula in subsection (5), except in a case to which paragraph (b) or (c) applies; or (b) using the formula in subsection (8) if that subsection applies to the amount of depreciation loss; or (c) using the formula in subsection (11) if that subsection applies to the amount of depreciation loss. Calculation of deduction: depreciation loss generally (5) The formula referred to in subsection (4)(a) is— standard calculation × business proportion. Definition of items in formula (6) In the formula in subsection (5),— (a) standard calculation is the amount resulting from a calculation made for the motor vehicle under section EE 16 (Amount resulting from standard calculation): (b) business proportion is the proportion of business use of the motor vehicle for the income year (expressed as a decimal) calculated under sections DE 3 to DE 12 . When subsection (8) applies (7) Subsection (8) applies when— (a) the amount of depreciation loss results from a calculation made for the motor vehicle under section EE 48(2) (Effect of disposal or event); and (b) the person’s amount of depreciation loss for the motor vehicle was, at a time when the person owned it, calculated under subsection (5). Calculation of deduction: depreciation loss on disposal (8) The formula referred to in subsection (4)(b) is— disposal depreciation loss × all deductions (base value − adjusted tax value). Definition of items in formula (9) In the formula in subsection (8),— (a) disposal depreciation loss is the amount resulting from a calculation made for the vehicle under section EE 48(2) : (b) all deductions is all amounts of depreciation loss relating to the vehicle for which the person has been allowed a deduction in each of the income years in which the person has owned the vehicle: (c) base value has the applicable one of the meanings in sections EE 57 to EE 60 (which relate to base value): (d) adjusted tax value is the vehicle’s adjusted tax value on the date on which the disposal or event occurs. When subsection (11) applies (10) Subsection (11) applies when— (a) the amount of depreciation loss results from a calculation made for the motor vehicle under section EE 48(2) ; and (b) the motor vehicle starts to have a business use in the same income year as that in which the amount of depreciation loss arose. Calculation of deduction: depreciation loss on disposal after business use (11) The formula referred to in subsection (4)(c) is— disposal depreciation loss × business proportion. Definition of items in formula (12) In the formula in subsection (11),— (a) disposal depreciation loss is the amount resulting from a calculation made for the vehicle under section EE 48(2) : (b) business proportion is the proportion of business use of the vehicle for the income year calculated under sections DE 3 to DE 12 , expressed as a decimal. Link with subpart DA (13) This section supplements the general permission and overrides the private limitation. The other general limitations still apply. Defined in this Act: adjusted tax value , amount , business use , deduction , depreciation loss , general limitation , general permission , income year , motor vehicle , own , private limitation , supplement , Compare: 2004 No 35 s DE 2