Did you know that unless you keep a log book for your car you can not claim more than $3,300¹ in motor vehicle deductions on your tax return, regardless if you are an individual or a business!²
Let's do some quick calculations.
Assuming you spend $75 a week for fuel, over 48 weeks that’s $3,600. This is already more than what you are allowed to claim and we haven’t even included registration costs, repairs, depreciation, interest on any finance or insurance!
Provided you are using your car predominantly for work purposes³, the only way to include these extra deductions is to prepare a log book.
Preparing the log book is easy too. Over a three month period on every trip you make in your car, whether personal or for work, just record the start and end odometer reading and state whether it was work related.
Then at the end of the three months, calculate what percentage of travel was for work.
Lets look at Gary.
Let’s say 2,000km out of the total 2,800km Gary travelled in the three months were work related.
That means Gary’s work related travel percentage would be 71.43%.
Now in the 2018 financial year, Gary spent $7,700 on fuel, repairs and registration fees.
His car also depreciated in value by $3,000 and he paid $1,100 in interest repayments, which brings his car’s total spend up to $11,800.
When multiplied by his work related travel percentage, that means Gary gets a deduction of $8,428.74.
But Gary didn’t keep a log book, so he can only claim $3,300.
Don’t be like Gary.
¹ Based on the ATO’s current ruling of maximum 5000kms at the set rate of $0.66 a km.
² If you are operating under a trust or company structure, you may be able to claim 100% of your motor vehicle expenses, so long as include 20% of the purchase price of the vehicle including GST as income.
E.g. The company bought paid $54,000.00 (inc GST) for a Mercedes in January 2015, which means the business must declare $10,800 of income every year. This could be more than the entire expense claimed against the vehicle!
³ This does not include travel from home to work, or work to home. However some exceptions do apply.
If you carry heavy or bulky tools to work, and there is no place to store these tools at your workplace, you may be eligible to include home to work travel as a when calculating your work related travel.