The ATO has recently announced an increase in the rate used under the cents per kilometre method to claim business and work-related car expenses from 72c/km to 75c/km.

Depending on your car's fuel efficiency, you might start to find even the increased 75c per kilometre method does not equate to much compared to your increasing car costs.

Historically around 90% of motor vehicle expense claims by individuals use the cents per kilometre method and it is certainly easier for the taxpayer from an administrative perspective. But it has some downsides: you can only claim up to 5,000km of travel and this rate is only a portion of the amount you probably really spend, particularly with soaring fuel prices. When using this method, you also can't claim any further car-related deductions like registration, repairs and insurance.

It might be worth considering what your claim could be under the logbook method for the coming financial year would be.

If considering the switch to the logbook method remember you will need to keep all car receipts for the year. A valid logbook also has strict requirements including you have to record every trip, including odometer readings, for a minimum of 12 consecutive weeks.

The ATO is cracking down on work-related expense claims. If they do ask questions, you really want to be able to show them your records. We suggest taking photos of your receipts, perhaps keeping them in an album on your phone or computer, so they don't get lost or damaged through the year.

Another important tip to remember is even though driving from home to your work puts you in a position to earn your income, the ATO technically classified as "private". You can't include kilometres from home to work when determining your logbook percentage or your work-related kilometres at tax time even if you live a long way from your regular place of work or you work outside normal business hours.

Contact us if you have any questions regarding car expense claims and work-related deductions in general.