Skip to content Skip to sidebar Skip to footer

Am I getting the best tax deduction possible for my car?

Many people pay more tax than they should be….. Sometimes because the accountant has taken the easiest way and at others times because the clients haven’t kept the right records.

Did you know there are four different ways to claim your car? At Accounting Revolution as long as you have the records we will check every method and ensure your tax deduction is maximised!!

Cents per kilometre – Set rate

Each year the ATO advises a rate per km based on engine size. For this method no supporting documents required just estimation on how many work related kilometres have been travelled during the year. Quick and easy but may not give you the best deduction and is also limited to a maximum amount of 5000 km per year

Tip – sometimes you use your spouse’s car – no problems you can even claim 5000 km per car if work related travel in both cars was 5000km

12% of Cost (original value)

For some reason this is an often forgotten method even though so simple – claim 12% of cost of the car (subject to luxury car limit – $57,466 for 2014)

The only rule –more than 5,000 business kilometres must have been driven for the whole year, or would have travelled if the car was not used for the full year.

All you need to have is proof of how much the car cost you

Log Book Method

Although often results in the maximum deduction- sadly many of us don’t keep the required records 

You must keep a logbook for a minimum of 12 weeks – this log book lasts for 5 years unless your circumstances change and you will be surprised how quickly 12 weeks passes – before you know it job done! The log book enables us to work out the percentage the car was used for

At June 30 make a note of your odometer records – easy to do and Accounting Revolution clients generally receive an email reminder late June.

Too hard I need to keep all my receipts? – URBAN MYTH! Yes you can keep all your receipts or if you prefer keep everything except for petrol and oil. Mr Taxman is quite OK with this- aint he nice!

One-third of Actual Expenses

The car must have travelled more than 5,000 business kilometres (or would have if car only used part year).

At June 30 make a note of your odometer records – easy to do and Accounting Revolution clients generally receive an email reminder late June.

Too hard I need to keep all my receipts? – URBAN MYTH! Yes you can keep all your receipts or if you prefer keep everything except for petrol and oil. Mr Taxman is quite OK with this- aint he nice! Much the same as the logbook method

Leave a comment