With a range of motor vehicle expenses tax deductible in Australia, your car could just end up saving you a bundle come June 30, particularly if you regularly drive your personal vehicle as part of your work.
When is a Motor Vehicle Expense Allowable as a Tax Deduction?
Eligible work related travel includes:
• Travel between work locations
• Travel to attend meetings, conferences and training courses
• Travel to attend client and customer meetings
• Travel to pick up goods, supplies or equipment for work
Travel between home and work is considered private travel and is not a tax deduction. This includes situations where minor work-related tasks are completed between home and work, such as collecting mail, trips to work outside of normal office hours and situations where you are on call. However, travel between home and work can be claimed where:
• You are required to transport bulky items to and from their usual place of work where there is no secure storage provided on-site. Eg open building site Bulky items include heavy equipment, ladders and any other items that cannot be easily transported using public transport.
• You are required to travel to an alternative location for business purposes (such as a client meeting) prior to arriving at your normal place of employment.
You are on-call, and your work is deemed to have commenced before you leave your home. This includes emergency services, such as doctor or nurses providing directions while in transit.
Cents Per Kilometre Method
Some guidelines for the Cents Per Kilometre Method:
• You can only claim up to 5,000km per year using this method. So, if you think you use your car more than this, the Car Logbook Method might be a better option for you.
• You do not have to keep a vehicle log book
• The ATO can ask you to explain how you calculated your claim, as well as how the use of your car was work related.
• You can claim 66 cents per work related km, regardless of the size of your car or its engine.
Car Logbook Method
A few things to keep in mind if you opt to use the car logbook method:
• You must be the owner of the car for which you wish to claim expenses
• You must keep a logbook for 12 continuous weeks, but you only have to do this once every five years (not every year)
• You must record all trips taken in the car, both work-related and personal
• You must keep receipts for all car-related expenses including petrol, insurance, servicing costs, registration and any other running costs.
Once you have complete your logbook for 12 weeks continuous weeks, it will be quite easy to determine how much you use your car for work, and how much for personal. Then, you can simply claim the business percentage of all expenses related to your car.