FBT Q&A ‘ Treatment of GPS installation costs

Question

Several years after a car was purchased, a GPS system was purchased and fitted to the vehicle. Do the costs that are incurred form part of the operating costs of the car for the year in which the device was purchased or is the cost added to the cost price of the vehicle?

Answer

The operating cost of a car is made up of the following items:

1. car expenses (other than insured repairs, registration, insurance and lessor’s charges pursuant to the lease agreement);
2. registration and insurance expenses attributable to the holding period;
3. where the car is owned, deemed depreciation of cost price and non-business accessories;
4. where the car is owned, deemed interest at the statutory interest rate for the year applied to the depreciated value of the car.

The ATO has expressed the view in their NTLG FBT Sub-Committee Minutes of 30 May 2002  that where non-business accessories paid for by an employer are fitted to a leased car some time after the lease commenced, the costs are not ‘car expenses’ as defined, and are therefore not taken into account under the operating cost method.

Although the minutes referred to leased cars, fundamentally the principal would apply to cars that are owned as well.

In any case, whether the car is owned or leased, if the cost and installation of the unit is below $300 then perhaps the minor benefit exemption can be applied.

Note that such costs could be included in the cost price of a car if they were incurred at or around the time the car was acquired. In this case, given the gap before fitting the GPS, it does not appear that the cost can be added to the cost price of the car.

If the GPS is of a portable nature but is simply being fitted to the car for convenience, and if it is to be used primarily for employment purposes, could it be considered an exempt portable electronic device under s. 58X?

The ATO lists examples of portable electronic devices to include a mobile phone, calculator, personal digital assistant, laptop, portable printer, and portable global positioning system navigation receiver.

However, if the GPS is more of an ‘in-dash’ type unit then it is most likely going to be considered not portable for the purposes of the s. 58X exemption.

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