Warnocks August Newsletter - Driving Your Tax Deductions Further
Car expenses - Driving your tax deductions further
Tip: Where you and another owner each use the car for separate income-producing purposes, you can each claim up to a maximum of 5,000 kilometres.
Tip: Please let us know if you would like us to send you a complimentary log book.
When you use your private car to generate income or for your employment, you can claim a tax deduction for your car expenses. If you use someone else's car, you can claim a deduction for your direct costs such as fuel, as a travel expense.
Business and work-related travel includes travel when you are carrying bulky tools or equipment (such as an extension ladder or a cello) which you cannot leave at work or your business destination; travel to attend conferences or meetings; travel to deliver goods or to collect supplies; and travelling between two employment or business venues.
Any allowance that you receive for car expenses is assessable income and will usually be shown on your annual payment summary. You can claim the cost of business or work-related travel against the allowance. Please note that the cost of travel between home and work is considered to be private mileage; an exception might be where the home is the place of business or centre of economic activity, and so travel from the home to a place of business could be business-related travel.
There are two methods of claiming Car expenses
A: Log Book Method: This is the only method that allows you to claim more than $3,300 p.a. ($3,400 in 2019). To work out the business-use percentage of your car travel, you have to keep a logbook and the odometer readings for the logbook period; this is a minimum continuous period of 12 weeks. Each logbook you keep is valid for five years, but you can start a new logbook at any time. Your claim is based on the business-use percentage. Allowable expenses include running costs and depreciation.
If you started to use your car for business purposes less than 12 weeks before the end of the income year, you can continue to keep a logbook into the next year so it covers the required 12 weeks. You can claim fuel and oil costs based on either your actual receipts or you can estimate the expenses based on odometer records that show readings from the start and the end of the period you had the car during the year. You need written evidence for all other expenses for the car.
B: The cents per kilometre method of calculating deductions for 2018 is 66 cents per km. From 1 July 2018 the rate is 68 cents per km. The maximum claim is 5,000 business kms. You need to be able to show how you worked out your business or work kilometres, for example, by producing diary records of work-related trips.
Tip: Where you and another owner each use the car for separate income-producing purposes, you can each claim up to a maximum of 5,000 kilometres.
Leased cars/Family Cars: You can claim a deduction for using a car that you leased or hired using either of the two deduction methods. If you have a family or private arrangement where you are effectively the owner of the car, the ATO will treat the car as if you owned it and you can claim expenses.
Tip: Please let us know if you would like us to send you a complimentary log book.
Disclaimer: The information in this newsletter is provided for informational purposes only and should not be relied upon as specific advice. Warnocks Pty Ltd does not accept any liability in respect of this information.