19Reduction of taxable value—otherwise deductible rule

19 Reduction of taxable value—otherwise deductible rule

(1) Where: (a) the recipient of a loan fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer; and (b) if the recipient had, on the last day of the period (in this subsection called the loan period) during the year of tax when the recipient was under an obligation to repay the whole or any part of the loan, incurred and paid unreimbursed interest (in this subsection called the gross interest), in respect of the loan, in respect of the loan period, equal to the notional amount of interest in relation to the loan in relation to the year of tax—a once‑only deduction (in this subsection called the gross deduction) would, or would if not for Divisions 28 and 900 of the Income Tax Assessment Act 1997, have been allowable to the recipient under that Act or the Income Tax Assessment Act 1936 in respect of the gross interest; and (ba) the amount (in this subsection called the notional deduction) calculated in accordance with the formula: Start formula GD minus RD end formula where:

GD is the gross deduction; and

RD is:

(i) if no interest accrued on the loan in respect of the loan period—nil; or
(ii) if interest accrued on the loan in respect of the loan period—the amount (if any) that would, or that would but for Divisions 28 and 900 of the Income Tax Assessment Act 1997, have been allowable as a once‑only deduction to the recipient under that Act or the Income Tax Assessment Act 1936 in respect of that interest if that interest had been incurred and paid by the recipient on the last day of the loan period;
exceeds nil; and
(c) except where the fringe benefit is:
(i) an employee credit loan benefit in relation to the year of tax; or
(ii) an employee share loan benefit in relation to the year of tax;
the recipient gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, in respect of the loan concerned; and
(ca) where:
(ii) the loan fringe benefit is a car loan benefit in respect of a car held by the recipient during a period (in this subsection also called the holding period) in the year of tax; and
(iii) the substantiation rules set out in Division 15 have been complied with in relation to the car in relation to the holding period;
the following conditions are satisfied:
(iv) the recipient gives to the employer, before the declaration date, a car substantiation declaration for the car for the year of tax;
(v) in a case where the substantiation rules require log book records or odometer records to be maintained by or on behalf of the recipient in relation to the car—the car substantiation declaration is accompanied by a copy of those documents; and
(d) if:
(i) paragraph (ca) does not apply; and
(ii) the loan fringe benefit is a car loan benefit in respect of a car held by the recipient during a period (the holding period) in the year of tax;
the recipient gives a declaration to the employer, before the declaration date and in a form approved by the Commissioner, that purports to set out:
(iii) the holding period; and
(iv) the number of whole business kilometres travelled by the car during the holding period; and
(v) the number of whole kilometres travelled by the car during the holding period;