It's tax time again and the ATO has recently announced higher scrutinising of work related car expenses. This doesn't mean the end of your work car claim. It just means you should make sure that you have your documentation in order to substantiate your claim and the best way to do this is to start keeping your records from the beginning of the financial year.
There are two ways in which the ATO allows deductions for work related car expenses and they are the logbook method and the cents per kilometre method.
In order to claim work related car expenses you must first prove that you use your own car in the course of performing your job. Examples of this include attending conferences and meetings, delivering items, travelling to and from multiple work sites, and carrying bulky tools or equipment in your own car (if your employer does not offer secure storage at work). You cannot claim travel from home to work and vice versa.
The logbook method involves keeping a logbook to track the work related percentage of actual car expenses incurred. Expenses able to be claimed by the logbook method include running costs, decline in value, interest on loan repayments, and improvement costs. There are various ways in which to keep a logbook such as a paper logbook kept in the car, a GPS logbook as well as apps that can be downloaded onto your smart phone, iPhone or tablet.
An easier way to get a deduction for using your car is to use the cents per kilometre method. This involves tracking how many business kilometres are travelled throughout the financial year in the course of your employment. A maximum of 5,000 Km can be claimed without needing written evidence, but you must be able to prove how you worked out your business kilometres. The best way to prove this is by keeping a logbook or a diary recording work related travel.
By keeping the relevant written evidence for claiming work related car expenses there will be no issue with claims at tax time, and remember that this evidence must be kept for 5 years for ATO audit purposes.
We can help you get the best result at tax time by maximising these claims and are happy to talk to you at any time to help get your records in order.