Don't let the looming stress of work-related car expenses cast a shadow over your tax season. Take charge early in the financial year to ensure a smoother experience and truly relish the most wonderful time of the year: tax return time. Say hello to those anticipated cash refunds!
This time around, be proactive by organising and documenting your actual car expenses, so that when tax time rolls around, you can efficiently leverage every eligible deduction. Unearth those neglected receipts and claim all the work-related expenses that have accumulated over the past 12 months. By staying ahead of the game, not only will you be on top of your tax responsibilities, but you'll also find yourself financially fit as you step into the new fiscal year.
Consider everything from essential work gear and gadgets to any accommodation expenses directly linked to your work commitments. And if you're utilising your personal car for job-related purposes, delve into the realm of work-related car costs. This comprehensive approach ensures that no potential deduction is overlooked, maximising your returns and turning tax time into a more rewarding experience. So, gear up, organise those receipts, and let the cash refunds roll in!
Claiming Car Expenses
If you’re a sales rep and you need to visit businesses, or you travel to worksites during your workday, then you can claim that work-related portion as a tax deduction. Woohoo!
Great - How Do I Claim Car Expenses?
There are two methods to work it out: the cents-per-kilometre method or the logbook method.
Choosing Your Method
The method you opt for hinges largely on the extent to which you utilise your car for work-related purposes. To simplify this decision, the Australian Taxation Office (ATO) offers a handy tool—the work-related car expenses calculator. It assists in determining the potential claimable amount based on your usage
The Cents Per KM Method
Under this method, you can claim a max of 5,000 (work-related) kilometres per car.
However, keep in mind that the claimable amount per kilometre is subject to change annually. It's crucial to stay informed by regularly checking the ATO website for the updated rate each financial year.
All you need to do is:
- Calculate the number of business kilometres x rate per kilometre for that financial year (ie 5000km x 72c), and
- Keep written evidence for how you worked out your business k’s (in case the ATO taps your shoulder).
The Logbook Method
Under this method, your claim is based on the work-related portion of your actual expenses for the car.
These are expenses like fuel or oil costs, as well as expenses relating to the kilometres you drove.
But there’s a catch: you need to keep a logbook of at least 12 weeks showing all the business journeys you made over that period. You’ll need to keep all your receipts, too.
What can’t I claim?
Well, first thing’s first. If you use a work car, you can’t just claim a deduction for anything. The deductions can only be if you use a personal car for work purposes.
Car Related Expenses
On top of that, you cannot’t claim a tax deduction for the following:
- Your Commute to Work and Back: Unfortunately, the routine journey from home to your workplace and back doesn't qualify for tax deductions.
- Private Travel: Expenses incurred during personal travel using your vehicle are not eligible for tax deductions.
- Salary Sacrifice or Novated Lease Agreement Payments: Any expenses covered through a salary sacrifice or novated lease arrangement cannot be claimed as deductions.
Employer-Covered Expenses: If your employer has already footed the bill for certain expenses, you cannot claim those amounts as deductions.
Now, those extensive journeys to your clients' offices in remote locations are beginning to yield tangible benefits! Your car expenses deduction is now a noteworthy aspect of your tax strategy.
Mastering Your Strategy to Maximise Your Tax Return
Stay on top of the latest rates and guidelines to ensure accurate claims, making the most of your eligible deductions and maximising your returns. Whether you're a frequent road warrior or an occasional traveller, choosing the right method and staying informed will contribute to a smooth and rewarding tax season.
General advice warning:
This information is general in nature and does not take into account your personal financial situation. It is for educational purposes only, and does not constitute formal financial advice. You should always seek personal financial advice that is tailored to your specific needs.
