Did you know that unless you keep a log book for your car you can not claim more than $3,400¹ 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 without a logbook 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. Each time you use your vehicle, you need to record the start and end odometer reading of the trip. Then state whether or not the trip was work related. You need to do this every time you use your car for three months.
Then at the end of the three months, tally up all the trips and calculate what percentage of travel was for work and what was personal.
Lets look at Gary.
Gary traveled 2,800km from October 1st to December 31st.
1,960km of his total travel was work related. That means Gary’s work related travel percentage would be 70%.
Now in the 2019 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 for the year up to $11,800.
When multiplied by his work related travel percentage, it means Gary would be entitled to a deduction of $8,260.
But Gary didn’t keep a log book, so he can only claim the set rate calculation we mentioned earlier $3,400.
Don’t be like Gary. Get your log book started today.
¹ Based on the ATO’s current ruling of maximum 5,000kms at the set rate of $0.68 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, however it may be subject to Fringe Benefits Tax which could result in you having to declare portion of the car purchase price as income.
E.g. The company bought paid $54,000.00 (inc GST) for a Mercedes in January 2017, which means the business must declare $10,800 of income every year to offset the FBT. 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.