Tax deductions for car-related expenses


Your car expenses can be claimed if you use it for work, but only if you own the vehicle. Your employer owns your car, or it is part of your salary package, so you cannot claim it. If you have a car, then you can claim the following expenses:


METHOD 1: CENTS PER KILOMETRE

  • This method allows you to make a claim based on a set rate for each business kilometres you travel. You can claim up to 5,000 kilometres per year, per vehicle, using this method.

  • If you travel more than 5,000 kilometres, this method of claim may not be suitable for you. You might be better off going with the logbook method.

  • The claim value is calculated by multiplying the total number of businesses kilometres travelled (up to 5,000 per vehicle) by the standard rate as per 2021 rates. This figure includes all vehicle operating expenses (including depreciation)

  • You do not need written evidence, but you must be able to demonstrate that you have travelled the claimed number of kilometres. A journal of work-related travel (including kilometres travelled) will suffice.

METHOD 2: LOGBOOK


This method bases your claim on the business use percentage of each car expense. This is determined by a logbook that must be kept for at least 12 weeks and updated every five years. You can claim all expenses related to the operation of the car through your logbook at your percentage of business use.


The logbook must detail all business trips made in the car during the 12-week period that it records, including:


When the log book period begins and ends

  • The car's odometer readings at the start and end of the period

  • The total kilometres travelled

  • The business percentage for the logbook period

For each journey in the logbook, you must record:

  • Date of journey

  • Odometer readings at the start and end of the journey

  • Kilometres travelled

  • Reasons for the journey

If you make two or more journeys in a row on the same day (you can record them as a single journey).


You must keep all receipts for insurance, servicing, and repairs throughout the year in order to justify your claim. Petrol can be estimated using the year's start and end odometer readings, which indicate the total number of kilometres travelled.


Depreciation is calculated as 25% of the car's written down value (using the 'diminishing value' method).


Remember that if your employer provides your car or it is part of your salary package, you cannot claim any of the costs. It is also critical that you keep track of all business-related expenses, including those related to your vehicle.


You may be able to claim direct costs (such as fuel) as a travel expense if you use someone else's car or another vehicle (that is not defined as a car) for work purposes.

  • Motorcycles

  • Vehicles with a carrying capacity of:

  • One tonne or more (such as a utility truck or panel van)

  • Nine passengers or more (such as a minivan).

WHAT YOU CANNOT CLAIM

Because normal trips between home and work are private, you cannot claim the cost of those trips, even if:


  • On your way to work, you perform minor tasks such as picking up the mail.

  • You return to work for a security check or parent-teacher interviews.

  • You work overtime and there is no public transportation available to get you home.


Contact Instant Tax Refunds for All Your Tax Return Needs. We offer SAME DAY TAX REFUNDS.


*Terms and conditions apply.

1 view0 comments