Maximise Car Expense Deductions 2024
Claiming car expenses on your Income Tax return can be tricky. With the 2024 tax season upon us, it’s important to understand what you can and cannot claim to maximise your refund and keep the Tax Man happy. We've knocked together a little guide to help you see if you can claim your car expenses.
Contents
- Understanding Eligible Car Expenses
- Home to Work Exclusions
- Methods for Claiming Car Expenses
- Common Traps to Avoid
- Example: Using the Logbook Method
- Gotax Deduction Grabber App
- Gotax Advice
Understanding Eligible Car Expenses
To claim car expenses, you must use your car for work-related travel. This does not include travel to and from work, but rather travel that is part of your job duties. Eligible expenses may include:
Fuel and Oil
Costs of running your car.
Repairs and Maintenance
Keeping your car in good working condition.
Depreciation
The decline in value of your car over time.
Insurance
Costs related to insuring your car for work use.
Registration
Fees for keeping your car legally on the road.
Home to Work Exclusions
It’s important to note that travel between your home and your regular place of work is generally not deductible. This is considered private travel. However, there are exceptions:
Travelling Between Jobs
If you travel directly between two different workplaces on the same day.
Carrying Bulky Tools
If you transport bulky tools or equipment that you need for your job and there is no secure storage at your workplace.
Temporary Work Locations
If you travel to a temporary work location that is not your regular place of employment.
Methods for Claiming Car Expenses
There are two main methods for claiming car expenses:
Cents per Kilometre Method
What It Is: You claim a set rate for each business kilometre driven.
Limit: Up to 5,000 business kilometres per year.
Record-Keeping: You need to keep a diary of work-related trips, showing the date, distance, and purpose of each trip.
Logbook Method
What It Is: You claim the actual expenses based on the percentage of work use of your car.
Requirement: Maintain a logbook for 12 continuous weeks to establish your business use percentage.
Record-Keeping: Keep receipts and invoices for all car-related expenses.
Common Traps to Avoid
To ensure you don’t fall into common pitfalls, keep these tips in mind:
Overclaiming
Only claim expenses directly related to work. Personal use of the car is not deductible.
Inaccurate Records
Maintain detailed and accurate records. The ATO requires you to keep records for at least five years.
Employer-Provided Cars
If your employer provides a car, you cannot claim car expenses. This includes salary-packaged cars and novated leases.
Example: Using the Logbook Method
Karen, a marketing consultant, uses her car to visit clients. She keeps a logbook for 12 weeks, recording each trip's date, distance, and purpose. At the end of the period, she calculates that 60% of her car use is for work. She can then claim 60% of her car-related expenses, such as fuel, maintenance, depreciation and insurance, on her tax return.
Gotax Deduction Grabber App
Maximise your tax deductions effortlessly with the Gotax Deduction Grabber App. This app provides all the log books and tax expense recording systems you need. Scan the QR code to download and streamline your tax return process.
Gotax Advice
Claiming car expenses can significantly reduce your taxable income, but it’s essential to follow the ATO’s guidelines. Choose the method that best suits your situation, keep detailed records, and ensure you only claim legitimate work-related expenses. By doing so, you can maximise your refund and avoid any issues with the ATO.
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