21/06/2024
If you use your car for work related journeys, other than to and from work, it’s likely that you can claim your car expenses on your tax return.
The Australian Taxation Office (ATO) provides several methods for claiming motor vehicle expenses for business purposes, each with specific requirements and limitations.
Cents per Kilometre Method
You can claim up to 5,000 business kilometers per car per income year using the cents per kilometre method. For the 2022–23 income year, the rate is 78 cents per kilometer. This method covers all vehicle running expenses, including depreciation, so separate claims for depreciation are not allowed. No written evidence is needed, but you must be able to justify the number of business kilometers driven (Australian Taxation Office).
Logbook Method
The logbook method requires you to keep a detailed logbook for at least 12 continuous weeks, which should reflect your travel for the entire year. The logbook should include the start and end dates of each journey, odometer readings, kilometers traveled, and the purpose of each journey. This method allows you to claim the business-use percentage of each car expense, including depreciation (Australian Taxation Office).
Depreciation
If you use the logbook method, you can claim depreciation on the business portion of the car's cost. For the 2022–23 income year, the depreciation claim is limited to $64,741 or the car’s cost if it's less than this amount (Australian Taxation Office) (Australian Taxation Office).
GST and Luxury Car Tax
When purchasing a car for business use, you can claim a GST credit for the business-use proportion of the car’s cost, up to the car limit ($64,741 for 2023–24). However, you cannot claim GST credits on luxury car tax paid. If leasing a car, you may claim a GST credit for the GST included in each lease payment (Australian Taxation Office).
Records
Regardless of the method used, maintain records such as loan or lease documents, tax invoices, and registration papers. Accurate and detailed record-keeping is crucial to substantiate your claims (Australian Taxation Office).
For more detailed information, visit the ATO website on motor vehicle expenses and purchasing a motor vehicle.
