Maximise Your Car Expense Deductions

Maximising Your Tax Deductions: Car Expenses in Australia

Using your car for work-related purposes can reduce your taxable income and maximise your refund. However, understanding the rules can be tricky, and mistakes can cost you. We'll explain how to claim work-related car expenses correctly while avoiding common errors.

Index

1. Understanding Work-Related Car Expenses
2. Methods to Calculate Deductions
   • Cents per Kilometre Method
   • Logbook Method
3. Expenses You Can Claim
4. Common Taxpayer Mistakes to Avoid
5. How Gotax and Deduction Grabber Can Help
6. FAQs on Car Expense Deductions
7. Conclusion

1. Understanding Work-Related Car Expenses

If you use your car for work, such as traveling between job sites, attending meetings, or transporting equipment, you may be eligible to claim deductions. However, commuting between your home and workplace is not deductible, as it is considered private travel.

To avoid errors, always distinguish between work-related travel and personal use. For detailed rules, you can discuss with Gotax or read through the ATO’s guidelines on car expenses.

2. Methods to Calculate Deductions

The Australian Tax Office (ATO) allows two methods for calculating car expenses:

Cents per Kilometre Method

• You can claim 85 cents per kilometre (88cents for 24/25) for work-related travel, up to 5,000 kilometres per year for the 2023-24 tax year.  Under this method you cannot claim more than 5000km, even if you did more.
• No need for detailed expense records, but you must document how you calculated your work-related kilometres.
• This method suits those with lower work-related travel.

Logbook Method

• Maintain a logbook for 12 continuous weeks to calculate the percentage of work use for your car.
• Claim a percentage of all car expenses, including fuel, maintenance, insurance, and depreciation.
• This method works best for high work-related car use and maximises deductions.

3. Expenses You Can Claim

If you use the Logbook method, here’s what you can claim:

• Fuel and Oil: Track your spending with receipts or a dedicated app.
• Repairs and Maintenance: Deduct the work-use portion of service costs, tyres, and repairs.
• Insurance and Registration: Claim the percentage related to work use.
• Depreciation: Claim depreciation on your car’s value (logbook method only).
• Loan Interest or Lease Payments: If you finance or lease your vehicle, you can claim the work-use percentage.

4. Common Taxpayer Mistakes to Avoid

Many taxpayers make errors when claiming car expenses. Here are the most common traps to avoid:

• Claiming Private Travel: Commuting from home to work is private travel and cannot be claimed.
• Poor Record Keeping: Without a proper logbook or receipts, your claims may be denied.  Use Deduction Grabber.
• Using Incorrect Methods: Switching methods within the same financial year is not allowed.
• Overestimating Kilometres: Inflating your work-related kilometres is a red flag for audits.
• Double-Dipping: Avoid claiming the same expense twice, such as claiming depreciation and lease payments together.

???? Example: Jenny drives to her office daily and occasionally visits client sites. She cannot claim her commute but can claim the kilometres driven for client visits if she records them accurately.

5. How Gotax and Deduction Grabber Can Help

At Gotax, we make it simple to claim your car expenses without the stress of manual record keeping. Our Deduction Grabber App is designed to:

• Automatically track your car expenses.
• Simplify logbook maintenance.
• Generate detailed expense reports for easy tax returns.

???? Get the Deduction Grabber App today! Scan the QR code below to download:

Gotax also offers Australia’s most affordable online tax returns:

• Complete Return: $55
• Simple Return: $15
• Small Business: $120
• Rental Property: $99+

Plus, our AI-powered Tax Q&A System, Phoebe, is available to answer your tax questions 24/7.

6. FAQs on Car Expense Deductions

Q: Can I claim parking fees and tolls?
A: Yes, you can claim parking fees and tolls for work-related travel. However, keep receipts to support your claim.

Q: Do I need a new logbook every year?
A: No, a logbook is valid for five years unless your work-use percentage changes significantly.

Q: Can I claim car expenses if I work under an ABN?
A: Yes, but additional rules may apply. Ensure you keep thorough records and consult a Gotax professional.

7. Conclusion

Claiming car expenses can maximise your refund, but it’s essential to follow the rules, avoid common mistakes, and maintain accurate records. Using tools like Gotax’s Deduction Grabber App ensures you claim every legitimate deduction while staying compliant with ATO guidelines.

With Gotax’s affordable pricing, you can lodge your Online Income Tax Return with ease and confidence.

Gotax, Online Tax Experts. Maximise your Refund… 2024 Complete Return $55, Simple Return $15. Small Business $120, Rental $99+.