Work Related Car Expenses

July 08, 2016

If you are an employee, self-employed or carrying on a business and you incur car expenses in the course of earning assessable income, you may be entitled to claim a tax deduction. What you can claim will depend on the nature of your trip. Normal trips between home and work cannot be claimed (except in limited circumstances) as they are a private expense.

As of 1 July 2015 only two methods are available for individuals to calculate a work related car expenses claim. These are the ‘cents per kilometre’ method and the ‘logbook’ method.

The ‘cents per kilometre’ method uses a set rate of 66c applied to each business kilometre up to a maximum of 5000km. The set rate for 2017 is 66 cents per kilometre regardless of the size of the engine. Records must be kept showing how the business kilometres were calculated.

The ‘log book’ method requires a calculation of the percentage of business and private use for the car through the use of a log book. This business use percentage is then applied to all allowable expenses related to the car. For further details on the information to be documented in a log book and other necessary records, please contact us.

For individuals conducting a business and using vehicles such as trucks, utes and panel vans with a carrying capacity of one tonne or more, or vehicles designed to carry 9 passengers or more, different rules apply.  Actual expenses incurred when the vehicle is used to earn assesable income can be claimed. Expenses incurred through private use of the vehicle cannot be claimed.  Fuel expenses are based on the actual expense incurred and must be substantiated. Depreciation costs can be claimed using either the Commissioners estimate of effective life, or a self assessed estimate.

If you have any questions or further enquiries, please do not hesitate to contact us on  (02) 9713 1199  and we would be happy to assist you.