Here we hope to explain the deductibility of motor vehicle expenses for our clients who use a motor vehicle for work
These deductions are only for motor vehicles with a carrying capacity of less than one tonne. Motor vehicles that are excluded from this are; utility trucks with a capacity of one tonne or more, utility trucks that have a carrying capacity of nine or more passengers and motorcycles.
You can claim your work-related expenses for a motor vehicle you own, lease or that is under a hire purchase agreement.
How you claim motor vehicle deductions
Cents per Kilometre
This is the simplest method available. You can claim up to 5,000 business kilometres per vehicle even if you have travelled more than 5,000 business kilometres. You do not need to substantiate expenses but you need to demonstrate how you calculated a reasonable estimate of business kilometres. The deduction is determined on the number of kilometres travelled (maximum 5,000) by a specified cent rate. This rate is 66cents per kilometre for the 2018 financial year and will increase to 68cents per kilometre in the 2019 financial year.
Logbook Method
This method requires you to calculate your actual business kilometres use of the vehicle as a percentage of the total kilometres travelled. A claim is based on the business percentage calculated for expenses paid for fuel, oil, registration, insurance, repairs, servicing, interest and depreciation or lease payments, and any other running costs of your vehicle.
Documentary evidence of expenses (receipts etc) must be kept for five years after you have made the claim.
A valid logbook must be completed recording your business trips showing:
- The date the journey started and ended, odometer readings for the start and end of the journey
- How many kilometres the vehicle travelled and
- The reason for the journey.
You must keep a logbook for at least 12 continuous weeks and if you have two vehicles both logbooks must be kept concurrently. The logbook is valid for five years and must be kept for five years after you made the last claim from the logbook.
If your business travelling pattern changes or you change employers, a new log book must be completed.
If you need assistance with Motor Vehicle Deductions or matters like it, please contact our office on (03) 9603 0066.