Claiming a deduction for car expenses

Below are the options for claiming car expenses as a deduction:-

Cents per kilometre method

We can use this method to claim up to a maximum of 5,000 work-related kilometres per car for you even if you have travelled more than 5,000 work-related kilometres. For example, if you travelled 5,085 work-related kilometres, you can only claim the cost of travelling 5,000 kilometres with this method. You cannot claim for the extra 85 kilometres.

You do not need written evidence but you may need to be able to show how you worked out your work-related kilometres.

12% of original value

• The claim is based on 12% of the original cost of your car or 12% of its market value at the time you first leased it.
• The cost or value is subject to luxury car limits.
• Your car must have travelled more than 5,000 business kilometres in the income year
• You don’t need written evidence but you need to be able to show how you worked out your business kilometres.

One Third of Actual Expenses

• must have travelled more than 5,000 business kilometres in the income year
• You claim one-third of all your car expenses, including private costs (but excluding capital costs, such as the purchase price, the principal on any money borrowed to buy your car and the cost of any improvements).
• For fuel and oil costs, you can keep receipts to work out the amounts or you can estimate them based on odometer records that show readings from the start and the end of the period you had the car during the year.
• You need written evidence for all the other expenses for the car, as well as records that show the car’s engine capacity, make, model and registration number.

Logbook Method

• Your claim is based on the business-use percentage of the expenses for the car.
• Expenses include running costs and decline in value but not capital costs, such as the purchase price of your car, the principal on any money borrowed to buy it and any improvement costs.
• To work out your business-use percentage, you need a logbook and the odometer readings for the logbook period.
• You can claim fuel and oil costs based on either your actual receipts or you can estimate the expenses based on odometer records that show readings from the start and the end of the period you had the car during the year.
• You need written evidence for all other expenses for the car.

Give us a call for assistance with your tax returns.

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