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How to Calculate Your Car Expense

Cents per kilometre method

  • Your claim is based on a set rate for each business kilometer.
  • You can claim a maximum of 5,000 business kilometers.
  • You don’t need written evidence but you need to be able to show how you worked out your business kilometers (for example, by producing diary records of work-related trips).

Where you and another joint owner use the car for separate income-producing purposes, you can both claim up to a maximum of 5,000 kilometers.

12% of original value method

  • Your 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 a car limit for the year you first used or leased the car.
  • Your car must have toured more than 5,000 business kilometers in the income year (or, if you used the car for only part of the year, it would have traveled more than 5,000 business kilometers had you used it for the whole year).
  • You don’t need written proof but you need to be able to show how you worked out your business kilometers.

As a joint owner, you can deduct your share of 12% of the cost of the car. For example, where there are two joint owners, you can each claim a deduction of 6% of the cost of the car.

One-third of actual expenses method

  • Your car must have traveled more than 5,000 business kilometers in the income year (or, if you used the car for only part of the year, it would have traveled more than 5,000 business kilometers had you used it for the whole 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.

As a joint owner, you can deduct one-third of your share of jointly incurred expenses and depreciation, and one-third of expenses wholly incurred by you.

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.

Other travel expenses

Other travel expenses you may be able to claim include:

  • travel expenses you incurred for meals, accommodation and incidentals while away overnight for work, such as going to an interstate work conference (generally, you can’t claim for meals if your travel did not involve an overnight stay)
  • the costs you actually incur (such as fuel costs) when using a borrowed car or a vehicle other than a car for work purposes
  • air, bus, train, tram and taxi fares
  • Car-hire fees.

You may have to show that you have reduced your claim to exclude any private portion of your trip.

For more information on Etax, Mytax and online tax return, please contact us at 1300 698 297 or you can email us at info@mytaxrefundtoday.com.au

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