As a car owner, it is significant to become aware that your car expenses can be tax-deductible if you fulfil the eligibility criteria set by the ATO. And although it may sound too complicated, it doesn’t have to be a hassle if you learn the essential information.
To help you begin on the right track, you can claim a deduction for car expenses if you use your car to:
● Take part in work-related events or workshops away from your job location.
● Travel straight from two different places of work if none of them is your residence
● Travel from your regular office to an alternative work location and vice versa
● Perform work duties in one or more locations each day
● Perform work-related activities
There are two ways to calculate your tax-deductible car expenses:
- Cents per Kilometre Method – Cents per kilometre applies a flat deduction rate per kilometre up to a maximum limit of 5,000 kilometres.
- The Logbook Method – You should use the logbook method to plan to claim care expenses for more than 5,000 kilometres of business travel in every financial year.
Furthermore, it is also important to keep these reminders in mind:
● You cannot claim a deduction for the expense of travels between home and work under any of the methods, even if you’re regular workplace is too far from your home
● You are only eligible to claim the work-related part of any private travel.
● If you have been reimbursed for your car expenses, you will not be able to claim a deduction
● Only one method is allowed to calculate the car expenses deductions
● For more than one cars, you can use the two different methods to calculate your deductibles
Should you want to learn more about the ins and outs of claiming deductions for car expenses, you can count on Prosperity Accountants to provide you with detailed information and guidance. Get in touch with our team of experts today!