If you’re using your personal car for work purposes, you are eligible to claim the expenses associated to this. If the car is part of your salary package or is owned by your employer, then you are not entitled to claim anything.
If you do own the car personally, there are two options that you can use to claim your car-related expenses:
CENTS PER KILOMETRE METHOD
- Using this option to claim is based on a set rate per each business kilometre travelled. By choosing this method you are entitled to claim up to a maximum of 5,000 kilometres each financial year, for each vehicle.
- If you are driving more than 5,000 kilometres this method of claiming may not be right for you. You might be better off using the logbook method.
- The value of the claim is determined by multiplying the overall business kilometres that are travelled (this is limited to 5,000km per vehicle) by the standard rate of 72 cents per kilometre. This amount includes all the vehicle running expenses (as well as depreciation)
- You may be required to provide written evidence to prove how you worked out your business kilometres (for example, by supplying diary records of work-related travel).
- If you and another joint owner use the vehicle for separate income-producing purposes, you can both claim up to a maximum of 5,000 business kilometres.
LOGBOOK METHOD
Under the logbook method, your claim is based on the business use percentage of actual vehicle expenses. The expenses include the running costs and decline in value but not capital costs. This is determined by a keeping a log book and odometer readings of the travel for at least a 12 week period.
You must keep your logbook and odometer records until the end of the latest income year in which you rely on them to support your claim and then for another five years thereafter. You can claim all expenses that relate to the operation of the car in your logbook at your percentage of business use.
The logbook will be required to have recordings all business trips made in the vehicle over the 12 week period, detailing:
- When the log book period starts and ends
- The car’s odometer readings at the beginning and end of the period
- The total kilometres travelled
- The business percentage relating to the logbook period
For each trip in the logbook, you must record:
- The date of the trip
- Odometer readings at the beginning and end of the trip
- The amount of kilometres travelled
- Reasons for the travel
- If you make two or more trips in a row on the same day (you may record them as a single trip)
You will be required to keep all receipts for the year to support your claim, such as servicing, repairs and insurance. Fuel may be estimated using the beginning and ending of the odometer readings for the year, indicating the total kilometres travelled.
The depreciation is worked out as 25% of the current value of the car using the diminishing value method.
If your vehicle is supplied by your employer, or is part of your salary package, you are unable to claim any of the expenses. It is important that you keep a record of all business-related expenses, including those related to your vehicle.
If you use someone else’s vehicle (that is not defined as a car) for business purposes, you may be able to claim the direct expenses (such as fuel) as a travel expense.
Other vehicles included in the above expenses are:
- Motorcycles
- Vehicles with a carrying capacity of:
- One tonne or more (for example, a utility truck or panel van)
- Nine passengers or more (for example, a minivan).
EXPENSES WHICH YOU CAN’T CLAIM
You are unable to claim the cost of general trips between home and work because that travel is private, even if:
- You do small tasks on the way to work, such as picking up the business mail
- You travel back to work for a security call out or personal appointments
- Working overtime and no public transport is accessible to use to get you home
The above information is intended as a guide. All actual details and individual circumstances differ, so please discuss your situation with one of our friendly tax champions. If you are unsure if you can claim an expense, keep the receipt and we will make sure that we claim all permissible deductions and rebates for you when preparing your tax return.
If you would like to know more about motor vehicle expense claims, please contact our office on: (03) 8393 1000.
