Using your car for work

As an employee you are able to claim a deduction for using your car for work purposes if you use your car for your job for any of these:

• You drive between separate jobs on the same day OR
• You drive between alternate workplaces for the same employer on the same day OR
• Delivering or picking up items/packages related to your job as required by your employer OR
• Travelling to conferences, meetings or other events as required by your employer  OR
• You can fit into the criteria for carrying bulky tools & equipment

How your claim is worked out

You have 2 choices

1. Cents Per Kilometre
2. Logbook Method

1. Cents per Kilometre Method

Claim up to 5000km per year using this method. The amount of Kms you can claim depends on how much you have used your car for work. You don’t have to have completed a full log book BUT you need to be able to show how you calculated your claim and how the use of your car was work related.

You can claim 66c per work related km, this rate is set by the ATO and covers the full cost of owning & running your car. If your claim is based on this way there are no other expenses for your car that you can claim

The benchmark here is that your claim has to be based on a ’Reasonable Estimate’. What is reasonable depends on if your work mileage tends to change week to week or if you have a set pattern of how you use your car for work.

Your work use varies If amount of km that you do for your employment is irregular, for example  you are moving between various job sites in your  job as a tradie, then you need more information so that your tax agent can claim the maximum amount they can for you. A logbook is the best way but a diary of work-related trip showing how many Kms you did each trip is the next best thing.

Your work car use is routine: the reasonable estimate here is really the story that explains the pattern of  you using your own vehicle for doing work trips.  For example if it is part of your job to regularly do the rounds to the post office & bank each day you work which is a 6 km round trip than your claim would be 6km X number days your work per week X number of weeks you worked for the year.  Your Kms might vary a bit here & there but on average that numbers not too far off.

Again if you want you can still do a logbook or diary to be more accurate but an average estimate would be enough to allow you to claim the deduction.

TIP: Remember the 5,000 kms are not an automatic deduction you need some evidence to support you claim

2. Logbook Method

The purpose of the logbook is to show the pattern of use for your work vehicle.  To use this method to claim your car costs for work you will need to do a bit more effort than if you go with the Cents per Kilometre option as you need to do a proper logbook plus keep accurate records of how much you have spent on running your car for each year. But if your work use is extensive it can be worth it for the extra deduction it might allow you to claim.

Once you have completed it gives your accountant the business use percentage for the car. Once we have your logbook percentage that allows us to claim a deduction of all the motor vehicle expenses for the year at that percentage.

So say for example that your logbook shows that you use the vehicle for 30% work related stuff and your total costs for year are $12,000. Your tax deduction would be $12,000 X 30% = $3,600.

To make the most of your motor vehicle expense claim we need to know exactly how much you spent for the year on owning, running and maintaining your car or vehicle.  Remember it is your Logbook % x Total Costs, so the more we know about the costs the better.

For the year keep good records of how much you have spent on each of these items:

• fuel and oil
• repairs and servicing
• interest on a motor vehicle loan
• lease payments (if any)
• insurance
• registration

Also we will need Purchase Cost & Date you bought your Vehicle so we can calculate any depreciation for you.

TIP Please see my article Logbook Requirements to make sure your logbook will be compliant.

Criteria for carrying Bulky Tools & Equipment  

For the vast majority of Australian the cost of getting yourself to & from your work is not a deductible expense– no matter how far or how much it costs you to get there. The exception to this rule is if you have to cart your work equipment with you and you have no other real choice but to do that.  Bulky in this instance means about 20 kilos worth of kit.

The key point to this is that you have no other real choice – that means that your employer expects you to have that equipment for your job and that you have no secure area to store those tools at your workplace.  This means that if it is a matter of personal preference that you may want to use your own gear or that you don’t want to leave your stuff at work you fall out of this exception.

If you your job & workplace fits into these criteria than you can legitimately include the distance you travel from home to work in either your cents per km amounts or your logbook records.

But be very sure you fit into those criteria as this is an exception to the rule and the ATO will expect you to be able to prove that you had no option other than to carry the heavy stuff.

For further information about how you can get a tax deduction for your car expenses  please go to ATO deductions you can claim  https://www.ato.gov.au/individuals/income-and-deductions/deductions-you-can-claim/vehicle-and-travel-expenses/car-expenses/

As with all tax deductions the more records you have prepared to bring to your Registered Tax Agent the better your tax result will be.

For exact advice call Excas Accounting 0458 421 878 to make an appointment.