Maximising Tax Deductions for Electric Vehicles in Australia

Electric vehicles (EVs) are becoming increasingly popular and understanding how to claim tax deductions for work-related use is crucial for maximising your tax benefits. Let's explore the two main methods for claiming deductions—the cents per kilometre method and the logbook method—and determine which one offers the maximum refund. Let's dive in!

Contents

1. Introduction to EV Tax Deductions
2. Cents per Kilometre Method
3. Logbook Method
4. Comparison of Methods
5. Conclusion
6. Gotax Deduction Grabber App

Introduction to EV Tax Deductions

When it comes to doing your income tax return, knowing how to claim deductions for your EV can help you maximise your tax refund. The Australian Taxation Office (ATO) provides two primary methods for claiming vehicle expenses: the cents per kilometre method and the logbook method. Each method has its advantages, and choosing the right one depends on your specific circumstances.

Cents per Kilometre Method

The cents per kilometre method is straightforward and easy to use. For the 2023/24 income year, the rate for EVs is 85 cents per kilometre. This rate encompasses all running expenses, including electricity costs.

• Work-Related Kilometres: 2,387 km (total distance traveled 3490km)
• Rate per Kilometre: 85 cents

Total Tax Deduction:  2,387 times 0.85 = $2,028.95 

Logbook Method

The logbook method allows for a more detailed claim by calculating a percentage of all car expenses based on work-related use. This method requires maintaining a logbook and records of all expenses.

• Work-Related Use Percentage: 2,387 diivided by 3,490 km times 100 = 68.39% 

• Expenses to Claim:

  • Registration and Insurance: $2,425
  • Depreciation: Calculated at 25% for cars costing up to the luxury car tax threshold of $89,332. For a $74,000 EV, the depreciation deduction is: [ $74,000 \times 0.25 = $18,500 ]

• Total Expenses:  $2,425 + $18,500 = $20,925 

• Work-Related Tax Deduction:  $20,925 times 68.39% = $14,315.06 

Comparison of Methods

• Cents per Kilometre Method: $2,028.95
• Logbook Method: $14,315.06

The logbook method provides a significantly higher tax deduction compared to the cents per kilometre method. It's essential to maintain accurate records, including a logbook and receipts, to support your claim.

Conclusion

For those looking to maximise their tax deductions, the logbook method is generally more beneficial, offering a higher refund. However, it requires diligent record-keeping. Always consider your personal circumstances and consult a Gotax professional if needed.

Gotax Deduction Grabber App

To simplify the process of tracking your tax deductions, consider using the Gotax Deduction Grabber App. This app includes all the logbooks and tax expense recording systems you need to effectively manage your expenses. Download the app by scanning the QR code and streamline your tax return process.

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