Motor vehicle expenses
Motor vehicle expenses incurred in the course of employment or carrying on a business are deductible s. 8-1(1)
Examples include petrol, repairs, services, registration, insurance, decline in value, road tolls, interest on car finance, car parking, car washes
Division 28 imposes substantiation rules to claims for car expenses for vehicles which carry less than 9 passengers or 1 tonne load
The method for claiming motor vehicle expenses depends on the type of business entity.
Sole traders and Partnerships
The motor vehicle deduction depends on whether the vehicles used in their business are:
- business purpose vehicles, or
- other vehicles.
Business purpose vehicles
You usually get a deduction for the running costs of these vehicles. They include:
- larger trucks or vans, and
- smaller vehicles (for example, utes, wagons or panel vans) that have been substantially modified for business use, or where private use is restricted to home to work travel and very minor other use.
Other vehicles:
- ordinary cars, station wagons or four-wheel drive vehicles
- most other vehicles designed to carry less than one tonne or fewer than nine passengers, and
- utes and panel vans where private use is not strictly limited.
Records
- receipts, invoices or similar documents for vehicle expenses
- a logbook for a continuous period of at least 12 weeks
- a record of total kilometres travelled during the logbook period, based on odometer readings
- odometer readings at the start and end of each income year the logbook method is used, and
- records showing how you calculated the business kilometres travelled.
METHODS
Where business travel exceeds 5,000kms per year
METHOD 1 Cents per kilometre
- Your claim is based on a set rate for each
business kilometre.
- You can claim a maximum of 5,000 business kilometres.
- You do not need written evidence.
METHOD 2 12% of original value
- Your claim is based on 12% of the original value of
your car.
- The value is subject to luxury car limits.
- Your car must have (or would have) travelled more than
5,000 business kilometres in the income year.
- You do not need written evidence.
METHOD 3 One-third of actual expenses
- You claim one-third of your cars expenses.
- Your car must have (or would have) travelled more than
5,000 business kilometres in the income year.
- You need written evidence or odometer records for fuel
and oil costs.
- You need written evidence for all the other expenses
for the car.
Where business travel equals or is less than 5,000kms per year
- Log Book method
- Cents per Km method
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