Maximize your motor vehicle tax deduction
Are you always on the road for work?
Whether you are an employee or a business owner, at some point of your career you may require use of your vehicle for work/business purposes to travel between office/work sites. You may be eligible to claim your car expenses in your tax return. But…
Have you wondered what you can do to maximise your motor vehicle tax deduction?
The following gives you a very brief idea of how the motor vehicle tax deduction works.
If you need to use your passenger car for work/business purposes, the ATO allow you to use one of the following two methods:
- cents per km method
- log book method
Cents per km method
This method requires you to work out the approximate business km travelled during the financial year and allows a claim of $0.66/km (for the 2017 financial year) up to 5,000 km. As long as you are able to substantiate your business km – eg. Travel diary, the ATO would allow for the deduction.
Log book method
This method requires more work but has a potential of claiming a larger tax deduction. This method requires you to record your travels in that particular vehicle for 12 consecutive weeks, and from there a business percentage can be worked out. All the expenses related to that vehicle can be claimed using the business percentage.
This method is more complicated and requires you to keep record of all the vehicle related expenses. Also a log book is only valid for five years so a new log book has to be prepared in the sixth year in order to continue to claim under this method.
The rules around motor vehicle expenses deductions are complex, but here at Aston we can help explain to you the details in simple words and are able to advise you a method to help you achieve your maximum deduction. Talk to us to find out more.