Car travel may be claimed if you travel between two or more different jobs locations, to visit clients, carrying bulky tools i.e. power tools, ladders or, if traveling is a necessary part of your occupation i.e. Real estate agent, travelling salesperson etc. There are 4 different methods that can be used for claiming your car.
The Log Book Method
Under this method a log book recording business kms travelled during a minimum of 12 weeks must be kept. The cars odometer readings must also be kept. The business kms are then divided by the total kms travelled during the log book period to work out the total business travel as a percentage. That percentage is then applied against all expenses on the car ie fuel, registration, insurance, repairs, depreciation etc. All receipts relating to the car expenses must be kept except for fuel receipts. The ATO will accept an estimate of fuel costs based on the kms travelled, average fuel consumption and average fuel costs.
Set Rate Per Km:
You can claim up to 5000kms of business travel without receipts however you must some evidence to back up the claim ie Diary or log book of kms travelled. The rates per km are based on the size of the motor and can change per year.
One Third of Actual Expenses:
Under this method you can claim 1/3 of all your expenses on your car as long as you have your receipts and fuel estimates. You are not required to keep a log book but must have travelled at least 5000kms for business purposes.
12 % of Original Value:
Under this method you can claim 12% of the original cost of a car regardless of when the car was first purchased. If you have a lease then the claim is based on the market value of the car at the time of taking out the lease. The car must have travelled at least 5000kms for business purposes. No deductions for actual running expenses are claimed.
Other business travel by air, train, taxi, bus, parking fees, tolls, car hire and accommodation away from home etc may also be claimable. In some instances, such as train travel, you may not be able to retain your receipt. In such circumstances a diary recording the date and amount of the expense up to $10 per claim, would be acceptable up to a total limit of $200.
I have a job which requires me to be on the road a great deal and I have to use my own car. What do I need to do so that I can claim a tax deduction for my car?
There are four different methods for claiming work related motor vehicle expenses and each have different record keeping requirements. To use the method that ensures you the best claim it is advisable to keep a log book and all receipts for expenses (e.g. repairs, services, tyres, etc). You do not have to keep receipts for petrol. Your log book should be kept for a minimum of 12 consecutive weeks and generally it will be valid for five years unless there are significant changes in your circumstances. You also need to keep the opening and closing odometer reading for each year. It is not necessary that you use the same claim method each year. The choice of method should be made on the basis of which is more favorable to you and which you have the appropriate records for. If you don't have a current logbook or have not retained all receipts you will be limited in which method you can choose. You cannot, however, claim any car expenses if your car is salary packaged.
I have incurred travel expenses this year. What can I claim?
Your travel must be relevant to your job function for you to be eligible to claim a deduction for those expenses. Where this is the case and you have the necessary documentation, you can claim the cost of transport and incidentals. If your travel involved an overnight stay you would be able to claim for meals. Travel overseas also has the requirement of keeping a travel diary.
I am paid an allowance for travel. Can I claim a deduction for that on my tax return?
A deduction will only be allowed if you have actually incurred a work related expense and have the necessary documentation. Travel to and from your job is generally not claimable unless, for example, you are carrying bulky equipment. Some awards allow for a payment of an allowance even though an expense is not necessarily incurred by the employee. If a deduction can be claimed it cannot be for more than the expense that you incurred even if the allowance that you have received was higher.