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Use a car for work? Here’s how to claim it on your tax

If you use your car for work purposes, you are entitled to claim the costs of using your vehicle to do your job.

There are two methods you can use to claim car expenses.

It is important to note that you must own or lease the car to claim under either of the methods. If your car is owned by your employer or is part of your salary package, then you are unable to claim anything.

Here are the two ways you can claim:

 

Method 1: cents per kilometre

Your claim is based on a set rate for each business kilometre you travel. Under this method you are eligible to claim up to a maximum of 5,000 kilometres per year, per vehicle.

If you travel in excess of 5,000 kilometres this method of claim may not be right for you unless you are happy to cap your claim at 5,000 kilometres (which some people who haven’t kept a log book – see below – have to do).

Note that because the 5,000 km limit applies per vehicle, if you change your car during the course of the year, you may be able to claim a further 5,000 kilometres for the new vehicle

The claim value is calculated by multiplying the total business kilometres travelled (limited to 5,000 per vehicle) by the standard rate of 72 cents per kilometre (rising to 75 cents per kilometre from July 1, 2022). This figure takes into account all the vehicle running expenses (including depreciation).

You do not need written evidence, however you need to be able to demonstrate that you have covered the kilometres claimed. A diary of work-related journeys (including the kilometres travelled) will suffice.

Where two or more people own or lease a car and each uses it for work purposes, each can claim 5,000km.

So, if Mr Jones used the car for work purposes on Monday and Tuesday and his spouse used the car for work purposes on Wednesday, Thursday and Friday, each of them doing 5,000 work-related kilometres in the vehicle, both can make a claim.

The cents-per-kilometre method can’t be used for all vehicles. It cannot be applied to motorcycles, mini buses and cars of 1 tonne or over, so some of the heavier four wheel drives and utes aren’t eligible for this method).

 

Method 2: Logbook

Your claim is based on the business-use percentage of each car expense.

This is determined by a log book that must have been kept for a minimum 12-week period, and must be updated every 5 years. Through your logbook, you can claim all expenses that relate to the operation of the car, at your percentage of business use.

The logbook must record all business journeys made in the car over the 12-week period that it records, detailing:

  • When the log book period begins and ends
  • The car’s odometer readings at the start and end of the period
  • The total kilometres travelled
  • The business percentage for the logbook period

For each journey in the logbook, you must record:

  • Start and finishing times of the journey
  • Odometer readings at the start and end of the journey
  • Kilometres travelled
  • Reasons for the journey
  • If you make two or more journeys in a row on the same day, you can record them as a single journey.

You will need to keep all receipts throughout the year to justify your claim, such as insurance, servicing and repairs.

Petrol can be estimated using the start and end odometer readings for the year, indicating the total kilometres travelled.

And a reasonable estimate of fuel and oil expenses can be made by multiplying average fuel consumption for the car (from the Green Vehicle Guide) by average fuel price (from the Australian Institute of Petroleum website.

You can also claim depreciation, which is calculated as 25 per cent of the written-down value of the car.

How do you do it?

You can obtain a free logbook from your local H&R Block office and there are also a number of logbook apps available, which will record your journeys using your phone GPS system.

Don’t forget to exclude holidays and other periods of absence from work from your claim.

Important note: if your car is provided by your employer, or is part of your salary package, you cannot claim any of the costs.

 

The car expenses you can claim

You can claim the cost of work-related car expenses if they are incurred while performing your job as an employee, such as:

  • Carrying tools or equipment required to complete your job
  • Travelling from your home to an alternative workspace (such as a client/supplier’s office), and then back to your own workplace or home at the end of the day
  • Travelling between two separate workplaces where you are employed
  • Travelling to conferences, meetings or other events as required by your employer
  • Delivering or picking up items/packages related to your job, and as required by your employer

 

The car expenses you can’t claim

You can’t claim the cost of normal trips between home and work. That travel is considered ‘private’, even if:

  • You complete minor tasks on the way to work, such as picking up the mail
  • You travel back to work for a security call out
  • You work overtime and no public transport is available to use to get you home

 

Can I claim car expenses for other types of travel?

Did you know you can claim the cost of using your car to drive to see your tax agent, for tax advice or to get your tax return completed.

You can also claim car expenses if you undertake any courses of study relating to your job and you use the car for trips associated with the course (such as driving from work to the educational institution).

It is important to note that the 5,000-kilometre-per-vehicle limit relates to all tax-deductible car use.

 

 

Article from: au.finance.yahoo.com

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