One of the government-sanctioned benefits of having a vehicle for business use is that you may be able to claim the business portion of that vehicle as a tax deduction. At Go Figured we are committed to ensuring that you can claim whatever deductions you are eligible for, and we know all of the possible ways in which you can get the maximum benefit possible from the Australian Taxation Office (ATO). Our view is that if you can claim it, you should.
That’s why we have created this guide to claiming business expenses from your vehicle, including what you need to do to claim and what method of logging hours is the easiest and most beneficial. Read on to find out more. Then, if you would like our professional bookkeepers to manage and administer this task for you, just call us to find out more about our service on (07) 3608 4260.
Can I claim my vehicle costs?
The ATO is pretty straightforward about who can claim, and for what. If you own your own car and use it to perform work-related duties, then you may be able to claim a deduction. If you use your car for partly private purposes and partly work-related purposes, then you have to apportion the amount that is work-related and can only claim those costs.
When working out what you can claim you will need to keep a logbook or a diary which details your private use and your work-related use.
What is considered work-related travel?
If you are using your own car, there are certain types of travel which are included as work-related travel and which are thus considered claimable. This includes:
- Carrying tools or equipment that you have to use for work and that you can’t leave at work (for example, a cement mixer or a ladder)
- Using your car to attend meetings or conferences
- Delivery of items
- Travel between your workplace to another place of employment – for example driving between two offices in the one city
- Travel from your workplace to a client’s workplace
You might get an allowance from your employer which is given for car expenses; this must be included on your tax return as assessable income and will usually be shown on your payment summary.
You cannot usually claim the costs of your travel between home and work, because this travel is private in nature.
How do you calculate what portion of your use is private?
There are two options for calculating what portion of your vehicle’s use is private or business related. These are the cents per kilometre method and the logbook method.
Cents per kilometre
This method requires you to be able to produce a method of working out your business kilometres, such as with a diary which contains evidence of business trips.
- A single rate is used, and you can claim 68 cents per kilometre for the 2018-19 income year
- You can claim a maximum of 5,000km for business use per vehicle that you own and use for business purposes
Using the logbook method allows you to claim for fuel and oil costs, but it requires detailed logbook keeping.
- Your claim is calculated based on the business-use amount of expenses for your vehicle, including running costs and decline in value
- You cannot claim capital costs (things like purchase price, improvement costs or principal on money borrowed to make a purchase)
- You need to keep a logbook for a minimum of 12 continuous weeks where you keep odometer readings and trip purpose information for this time
- Written evidence must be produced for all other expenses for your vehicle
It is well worth calculating and keeping this information to be able to claim for the business portion of use of your private vehicle; but we know that you’re busy and this kind of record keeping takes time. That said, you can buy logbooks from places like Officeworks, and you can find apps and software that make tracking easy (or easier, at least!).
At Go Figured we can provide you with strategies and solutions to make claiming for business expenses simple. Call us today on (07) 3608 4206 to find out more about claiming for business expenses this tax year and get the biggest possible return from the ATO.