Claiming Car Expenses

|by Christine Harvey|Taxation and Compliance

The ATO will be looking closely at work related car expense claims made under the cents per kilometre method with a focus on claims right up to the 5000km threshold which does not require detailed records to be kept.

" While it’s true that you don’t need written evidence for claims of up to 5,000 kilometres per year, you do need to be able to show that you were required to use your car for work, and how you calculated your claim,” said ATO assistant commissioner Kath Anderson.

" It is also important to make sure you don’t double-dip. In other words, you cannot claim expenses that have already been paid by your employer, including salary sacrificing arrangements.” She added.

Per the ATO, you can claim a deduction for work-related car expenses if you use your own car during performing your job as an employee, for example to:

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carry bulky tools or equipment (such as an extension ladder or cello) which your employer requires you to use for work and cannot leave at work

  • attend conferences or meetings
  • deliver items or collect supplies
  • travel between two separate places of employment, provided one of the places is not your home (for example, when you have a second job)
  • travel from your normal workplace to an alternative workplace and back to your normal workplace or directly home
  • travel from your home to an alternative workplace and then to your normal workplace or directly home (for example, if you travel to a client’s premises) .
  • perform itinerant work.

If you receive an allowance from your employer for car expenses, it is assessable income and the allowance must be included on your tax return. The amount of the allowance will usually be shown on your payment summary.

You can’t claim the cost of travel between home and work because this travel is private.

There are two available methods to calculate your car expense claim, the logbook method and the cents per kilometre method.

The logbook method requires that a logbook is kept for a minimum continuous period of 12 weeks to determine the business use percentage of the car. The business use percentage is applied to eligible car expenses for the year. Written evidence must be kept for all expenses of the car except for fuel and oil costs which can be estimated based on the odometer records that show readings from the start to the end of the period you had the car.

The cents per kilometre method does not require written evidence but you need to be able to show how you worked out your business kilometres. The number of kilometres travelled for income-producing purposes is multiplied by the ATO rate of 66 cents per kilometre to a maximum of 5000km.

ATO Source: https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Vehicle-and-travel-expenses/Car-expenses/

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