Are you using your vehicle in the course of your employment?
What sort of travel is considered to be work related and what car deductions can you claim?
Since the 2015/16 tax year there are now only two methods for calculating work-related car deductions and these are:
| Method | Calculation | Substantiation Requirements |
| Cents per Kilometre | Number of business kilometres you travel throughout the year multiplied by a set rate per the ATO (capped to a maximum of 5,000 business kms). For the 2015/16 year the set rate for all motor vehicles is 66 cents per kilometre | None * |
| Log Book | Total of all running costs, including depreciation (and interest expense if car financed) multiplied by a business use percentage per your log book | Log Book
Evidence of running costs incurred |
*In the event of an ATO audit you would need to be able to reasonably demonstrate how you worked out your business kilometres.
What sort of travel is considered work-related?
• Travel between two separate places of employment
• Travel from your normal workplace to an alternative workplace
• If you perform itinerant work
• If you need to carry bulky tools or equipment & it is essential to carry them & then is no secure place to store them at your workplace
• Travel to conferences or meetings
• Travel to deliver items or collect supplies
• Important! Travelling between home and your usual place of work does not count as business use, unless your home is your place of business, even if you have to complete a minor task on the way to work such as collecting the mail.
What deductions can I claim?
| Scenario | Operating Costs | Records Required |
| Purchased outright | Running Costs (fuel, registration, insurance, servicing, new tyres, maintenance, car wash) & Depreciation (currently calculated at 25% of the written down value of the car limited to the luxury car depreciation cost limit) | Purchase Contract
Receipts for running costs |
| Chattel mortgage | Running Costs (see above), Depreciation (see above) and Interest Expense component of the repayments
|
Purchase Contract
Finance Contract Receipts for running costs |
| Lease | Running Costs (see above) and monthly lease payments | Lease Agreement
Receipts for running costs |
What are the ATO requirements for a valid log book?
• Log book is valid for five years
• Log book must be kept for at least a 12 week (3 Months) continuous period
• Odometer records must be kept – at the start & end of the log book period
• Total number of kilometres travelled during the log book period
• Log book must reflect the usual usage of the vehicle throughout the whole year
What do I need to record in my logbook?
For each journey during the log book period you need to record:
• start and finish times
• odometer readings at the start and end of the journey
• kilometres travelled
• reason for journey (in the ATO’s view when noting the purpose just saying “business” will not be enough more description is required).
There’s an app for that!
Did you know there are lots of apps which enable you to capture receipts for work related car expenses as well as enter information for a log book? For example: ATO myDeductions app, Logit app (this uses your smartphone’s GPS function) or LogbookMe…just to name a few.
| What Next?
If you would like to know more about claiming Work Related Car Deduction specific to your circumstances then please give us a call on 07 5451 1118 or drop us an email at reception@mjjacountants.com.au
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