26 May 2017
Reduce your tax payable - Claim motor vehicle expenses
Reduce your tax payable by claiming motor vehicle expenses. You may be eligible to decrease your tax payable by using the Cents per Kilometre method or the Logbook Method, resulting in an increase in tax deduction.
A registered tax agent with the ATO, Platinum Accounting Brisbane can help you increase your tax deduction and reduce your tax payable which can lead to an increase in your tax refund, if you are eligible.
The Cents per Kilometre Method
This method does not require any logging or written evidence. The cents per kilometre method allows you to claim vehicle expenses using a set rate for every kilometre travelled for work or business. A maximum of 5,000 business kilometres can be claimed for each car. Even though there is no written evidence required, you may be asked to show how you determined your claim.
From 1 July 2017, total vehicle expenses are calculated at a rate of 66 cents per business kilometre. Therefore, once you determine the number of kilometres you drove for work or business, we can multiply that amount by the business kilometre rate to calculate the claim. You do not have to worry about the calculations at Platinum Accounting; we will ensure your claim reflects the time and energy that you invest in your business.
The Logbook Method
To claim your car expenses as a tax deduction under this method, you must maintain detailed records of your car use. The Logbook method allows you to estimate the percentage of vehicle expenses that are work-related or business-related. This work/business use percentage is then used to claim your tax deduction for car expenses on your tax return.
A car logbook allows you to track the kilometres you drive for business. The logbook also serves as required evidence from the ATO to claim the car expense tax deduction.
To use this method, keep a logbook in your car over a consecutive 12-week period and record the following details for every trip you make in your vehicle:
The date of the journey
The start and finish times of the journey
The start and finish odometer readings of the journey
The total number of kilometres driven for the journey
The purpose of the journey
These details must be entered for every car trip, whether the trip is for business or not. So, the trip to meet with your next client for business purposes must be recorded with as much detail as the trip to the supermarket for personal purposes. In addition to the details for every trip in your car, the logbook must also include overall totals for the entire 12-week logbook period to be submitted as evidence for your vehicle expense claim:
The start and finish dates of the logbook period
The start and finish odometer readings for the logbook period
The total number of kilometres driven for personal use
The total number of kilometres driven for work use
At your next tax appointment, bring in your complete and detailed logbook and we will calculate the work use percentage for you.
Pre-printed logbooks are available at the Newsagent, or simply ask us for a Platinum Accounting pre-printed logbook. Make sure the logbook is always in your car, so you can log accurately. Once you have completed the 12-week log period, the logbook will be valid for five years. You can also use the logbook method to cover the travel of two or more cars, if the consecutive 12-week period is the same for all the cars.
It is important to accurately record the details of your logbook. This submission is subject to audits by ATO and should not contain misleading data. Keeping a diligent and correct record could save you thousands of dollars in fines.
Now that you know how to claim your vehicle expenses, it is time to set up an appointment to see how we can get you the best tax deduction. When you come for your appointment bring the items in this list already totalled, so we can use our time together more efficiently to determine your tax deductions:
Receipts for fuel (not including miscellaneous items and snacks bought at the station)
Receipts for car services and repairs
Proof of car insurance
Proof of car registration
Motor Vehicle Purchase tax invoice and finance documents
See our info graphic below for a summary of the logbook method: