Can I Claim Car Expenses On My Tax Return?
You are entitled to claim the costs of using your car to do your job, if you use your car for work purposes. There are two methods you can use to claim car expenses:
METHOD 1: CENTS PER KILOMETRE
- 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 you will need to use the logbook method to claim.
- The claim is calculated by multiplying the total business kilometres travelled (limited to 5,000 per vehicle) by the standard rate of 68 cents per kilometre.
- You do not need written evidence through this method, 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.
UPDATE The ATO has expressed concerns with individuals claims of kilometers on the assumption that “no explanation” is required. This is an expense the ATO WILL be paying closer attention to from 2019.
METHOD 2: LOGBOOK
- This is determined by a log book that must be 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. Your claim is based on the business use percentage of each car expense.
- The logbook must record all business journeys made in the car over the 12 week period 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
- You will need to keep all receipts throughout the year to justify your claim, such as insurance,petrol, servicing and repairs.
- Depreciation is calculated as 25% of the recorded value of the car (using the Diminishing Value method).
- It is a requirement that you keep a record of all business-related expenses which relate to your car.
Important note: You must own 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.
WHAT CAR EXPENSES YOU CAN CLAIM
You can claim the cost of work-related car expenses if they are incurred whilst performing your job as an employee, such as:
- Carrying tools or equipment required to complete your job
- Travelling from your work place to an alternative work place (such as a client/supplier’s office), and then back to your own workplace.
- 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
You may be able to claim home to work travel if you are required to carry bulky tools or equipment when there is nowhere secure to keep the tools or equipment at your employers premises.
WHAT CAR EXPENSES YOU CANNOT CLAIM
You cannot 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 or parent teacher interviews
- You work overtime and no public transport is available to use to get you home
You can also claim the cost of using your car to drive to see your tax agent for tax advice or to get your tax returns done. You may have to apportion the costs if your journey has a dual purpose and the other purpose is considered ‘private’ in nature. It is important to note that the 5,000 kilometre per vehicle limit relates to all tax-deductible car use.