A common (and at times inaccurate) assumption made about claiming a work related vehicle deduction is that as long as your car use is work related, it can be claimed as a deduction in your tax return. The Australian Taxation Office (ATO) states that to be able to claim car expenses, you must be able to satisfy certain work-related usage conditions.

Claimable Car Expenses

• use your car for work-related trips during the day/night.
• drive to work-related conferences or meetings that aren’t held at your usual place of work.
• travel between two places of employment if neither of them is your home.
• drive from a normal workplace to a different workplace, then back to where you would usually work.
• drive from home to a workplace that isn’t your usual place of work and then drive to your usual workplace or directly home.
• regularly work at more than one site each day so you drive between them before driving home.
• You have to carry bulky or heavy tools or equipment to and from work and you are not able to store them at work.

Non-Claimable Car Expenses

• Travel between home and work or vice versa.
• Travel costs were reimbursed by your employer.

Car Deduction Methods

There are two methods to calculate car expense claims on your tax return which is the cents per km method and logbook method.

Cents Per Kilometer Method

The cents per km method is based on the number of kms travelled multiplied by the ATO prescribed rates for the financial year. The per kilometre car expense claim rate for 2022-23 is 78 cents per km. This claim method avoids the need to keep track of individual car expenses and receipts. A diary is recommended to keep track of the business kms. Under this method, full substantiation (e.g. receipts for expenses) isn’t needed, however there must exist an objectively reasonable basis of facts to enable a claim. Business kilometres are those travelled by car in the course of producing assessable income, or between work places.

Logbook Method

Using a logbook, your tax deduction claim is based on your car’s “business use percentage”. Your business use percentage is the percentage of kilometres you travel in your car for business related purposes.

How It Works

• Keep a logbook for 12 continuous weeks
• You must own the car
• You only need to complete the logbook process one time every five years (or less)
• Record all business and personal trips
• Keep receipts for all expenses related to your car, including fuel, repairs, interest on loan, lease payments, insurance, rego and depreciation.

How To Maintain a Log Book?

To be valid, your logbook must contain the following information:

• when the logbook period ends
• the car’s odometer readings at the start and end of the logbook period
• the total number of kilometres the car travelled during the logbook period
• the number of kilometres travelled for each journey recorded in the logbook

You will need to record the start and finish times for each journey, odometer odometer readings at the start and end of the journey, kilometres travelled, reason for the journey and the business use percentage for the logbook period.

Logbook Record Keeping Methods

The below is a list of various approved ATO log book record keeping sources:

• Paper logbooks
• ATO digital logbook (Does not include automatic trip logging)
• ATO compliant log book template in PDF or Excel
• ATO approved phone applications

The ATO have approved a list of mobile phone applications but as part of my blog I am just going to discuss the two I found very good and easy use.

Mileage Logbook by Driversnote

Features Include:

• Create locations -Track your trips faster by saving frequently visited places.
• Multiple vehicles – Track mileage and keep separate logs for multiple vehicles.
• Work Hours – Set your work hours and let the app categorise your trips automatically.
• Odometer Log – Add odometer readings and get reminders for a complete logbook.
• Reporting Reminders – Submit your mileage reports on time, every time.
• Track Trips Manually – Log manual trips and the app will calculate the distance for you.
• Multiple Workplaces – Track mileage and keep separate logs for multiple workplaces.

GoFar

Features Include:

• Automated Mileage Logging and Reporting. Track’s your fuel spend and instantly export spreadsheet reports to your email.
• Works With Any Tax Form. Access your current expense claim summary anytime.
• Tracks Every Trip – GOFAR is a leave-in device, automatically logging each trip your car makes (even if your phone battery dies) so you have a complete record of your mileage at tax time.
• Customise To Your Needs – Tag your trips to match your unique business / personal situation and get reminders for insurance renewals, registration, servicing and more.
• Compatible with both iOS and Android

As you can see, work related vehicle deductions can become quite complex. If you have any questions regarding your claims please Contact Us for more information.

Written for you by Amanda Bonavita