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Motor Vehicle Expenses

Companies and Trusts

Deductions for motor vehicle expenses owned or leased may be claimed in full. Fringe Benefits tax may have to be paid if vehicles are also used for private purposes.

Sole Traders and Partnerships

Methods

5,000 business km or less
  • cents-per-kilometre method, or
  • logbook method.
More than 5,000 business km
  • cents-per-kilometre method (claim limited to 5,000 km)
  • logbook method
  • 1/3 expenses method, or
  • 12% of original value method.
Logbooks in the taxation office approved form can be purchased from business stationery suppliers.

RATES PER BUSINESS KILOMETRE - 2007
Ordinary car – engine capacity Rotary engine car – engine capacity Cents per kilometre
1600cc (1.6 litre) or less 800cc (0.8 litre) or less 58 cents
1601–2600cc (1.601–2.6 litre) 801–1300cc (0.801–1.3 litre) 69 cents
2601cc (2.601 litre) and over 1301cc (1.301 litre) and over 70 cents
[Sce: www.ato.gov.au - NAT   0976]


METHOD 4 – Logbook
  • Your claim is based on the business use percentage of each car expense.
  • You need a logbook so you can work out the percentage.
  • You need odometer readings for the start and end of the period you owned or leased the car.
  • You can claim fuel and oil costs based on odometer records.
  • You need written evidence for all the other expenses for the car.

LUXURY CAR LIMITS FOR THE PAST 10 YEARS
2006–07 $57,009 2001–02 $55,134
2005–06 $57,009 2000–01 $55,134
2004–05 $57,009 1999–2000 $55,134
2003–04 $57,009 1998–99 $55,134
2002–03 $57,009 1997–98 $55,134
Income Tax Records
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 car’s 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