What this ruling covers
The Australian Taxation Office issued Tax Determination TD 2006/39 confirming that a hearse is not a car designed mainly for carrying passengers under section 40-230 of the Income Tax Assessment Act 1997.
The car limit and how it normally works
The car limit caps the cost figure that can be used to calculate depreciation deductions under Division 40 of the Income Tax Assessment Act 1997 for passenger vehicles. This ruling confirms that cap does not apply to a hearse.
Why a hearse falls outside the restriction
The ruling states that a hearse is extensively and permanently modified from its original design. Those permanent alterations - including removal of rear doors, fitting of flush panelling, and modification of the rear compartment, as described in Miscellaneous Taxation Ruling MT 2033 - place a hearse outside the definition of a passenger car for the purposes of the car limit.
Because a hearse falls outside that definition, the full purchase cost of the hearse can be used to work out depreciation deductions under Division 40.
Income years covered
The ruling applies to all income years, both before and after 31 May 2006, unless it conflicts with a dispute settlement already agreed before that date.
Key actions
- Funeral businesses that own a hearse can depreciate its full purchase cost under Division 40 of the Income Tax Assessment Act 1997 - the car limit does not cap the deduction.
- The full-cost depreciation treatment depends on the hearse having the permanent modifications described in Miscellaneous Taxation Ruling MT 2033 being present.
- For ordinary passenger vehicles also owned in the business, the car limit continues to apply - the current year's car limit is available at ato.gov.au.
This is a plain-English summary for information only, not legal or compliance advice. Always check the official source or consult a qualified professional.