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How to claim your car costs on your tax return

Have you been considering getting a work vehicle or need to claim car expenses on your tax return for a new job and want to know how it works? Here is some handy hints on how to go about claiming car expenses on your tax return.

What is classed as car expenses on your tax return?

Car expenses are defined as a deduction you can claim for using your own vehicle or leased vehicle within a workplace.

You can claim car expenses on your tax return for work if while you are performing work related duties you are required to use your car to:

  • Carry bulky tools/equipment
  • Attend meetings
  • Deliver items or collect supplies
  • Travel between two places of employment
  • Travel from one workplace to an alternative workplace ie. another office
  • Travel to alternative workplace directly from your home eg visit to a client
  • Perform itinerant work

What you can’t claim:

  • You cannot claim the cost of travel between home and work because this is classed as private.

Car expenses are one of the most commonly claimed tax deductions, however the rules have changed for the 2016 tax return.  You can now only calculate your car expenses in one of two ways, cents per km or the logbook method.

Here is what you need to know:

Previously you could claim:

  • 12% of the original value of your car
  • 1/3 of the actual value
  • A logbook for 12 continuous weeks
  • Cents per km

Now you can claim:

  • A logbook for 12 continuous weeks
  • Cents per km – you can no longer determine cents per km by engine size they now have just one fixed rate of 66c per km for all cars.

What is the better way of claiming your car costs on your tax return?

Cents per km V’s Logbook

Cents per km’s

  • You can claim 5,000km per year
  • Not required to keep a logbook
  • ATO can ask to audit how you calculated your claim and how it is work related.

You can claim:

  • Petrol
  • Registration
  • Insurance
  • Servicing
  • Interest on loan costs
  • Depreciation
  • Other running costs

Logbook method

  • Must keep 12 continuous weeks
  • You must own/lease the car
  • You only need to complete the logbook once every 5 years
  • Record all business trips and all personal trips
  • Keep receipts for

You cannot claim:

  • Expenses between home and work
  • You cannot claim car expenses if you were reimbursed for the same cost by your employer.

Not sure what you should claim on your tax return for your car costs?

Check out this tax return calculator https://www.ato.gov.au/calculators-and-tools/simple-tax-calculator/

How do I lodge tax return online?

If you are lodging your tax return yourself you should lodge your tax return through the ATO’s website www.ato.gov.au as it is the quickest, easiest and safest way to lodge your tax return.

Do I need to lodge a tax return?

If you have earned an income during the taxable year and have had tax withheld from your pay or you have received payments from the government, then you will be required to submit a tax return.

You may choose to have your tax return prepared by an accountant or you can choose to do your own tax return. You can do this by going to the ATO website and following the prompts to prepare your own online or paper tax return.

If you are still unsure as to whether you need to do a tax return or not, you can go to the ATO website or follow this link “do I need to lodge a tax return”.

What is a MyGov tax return?

All online tax returns are done through the MyGov website and are called a MyGov Tax return.

Simply go to the website and follow the prompts to lodge your tax return. There are also some helpful video’s on how to lodge your tax return if you are feeling dubious.

When is the tax return deadline?

Your Australian tax return is due to be submitted on the 31st of October.

In conclusion, there have been some changes to this years tax returns and the way you claim your car costs and expenses. However the system does seem to have been simplified and still manageable for the average person to understand and complete. If you are in doubt the best option may be to consult an accountant and have a professional prepare your tax return.

tax return

tax return