David Douglas Accountants

MOTOR VEHICLE EXPENSES TAX DEDUCTIONS
 

30 June 2024

 

 

Travel to and from work is usually not a tax deduction.

 

 

Most ATO audits are conducted 2 years later and

 

are focused on motor vehicle expenses log book and

 

employer's supporting letter. 

 

 

You must have an Employer's letter stating weight and

 

dimensions of your equipment required for work with no

 

secure lock up on site or the reason you have to use your car

 

for work purposes.

Some exceptions are:

1. Carrying bulky equipment with no secure lockup at work.

 

(Bulkiness of equipment is determined by size & weight.  For tradesmen it could mean a minimum of a 35 kg tool box plus other items e.g. nail guns, drills, drop saws, materials, etc. Bulkiness is also determined by size e.g. Ladders, bench horses, large oil drums, spare tyres, etc.) If in doubt ask for a private ruling.

2. Travel between two places of work.

3. Travel to attend meetings and then to home or work.

4. Travel from home or work to see clients and then back to home or work.

 

5. Some travel to a place of education.

 

6. When you travel overnight for work.

This only applies to motor vehicles whose carrying capacities are 1 ton or less or fewer than 9 passengers.

Most of my clients use the ‘log book method’ or the ‘set rate per kilometre method’.
 

Method 1

LOG BOOK METHOD

You must keep a log book for 12 weeks for each car once very 5 years.

You do not have to start a new log book when you change cars if the business % is similar.

You must have written evidence for registration, insurance, services, repairs, depreciation, interest, lease payments, RACQ, car washes etc.

PLEASE SUMMARIZE THE FOLLOWING:

Motor vehicle - 30 June 2023 and 30 June 2024 odometer readings

Motor vehicle - Log book % and business kilometers traveled

Motor vehicle - Fuel

Motor vehicle - Registration

Motor vehicle - Insurance

Motor vehicle - Interest or leasing expenses (Please provide hire purchase or loan agreement)

Motor vehicle - Repairs

Motor vehicle - Depreciation (Please provide date of purchase) 25% diminishing value method

If purchased after 1 July 2023 limit $68,108 - 25%

Motor vehicle - Breakdown service e.g. RACQ

Motor vehicle - Car washes

Motor vehicle - An extended warranty is deductible spread over the period that the warranty applies. e.g. If you

have a factory warranty for 3 years then you buy an extended warranty for 3 years. You may claim an apportioned

tax deduction over years 4, 5 and 6.

 

You may claim $200 worth of items costing < $10 without receipts.

You do not need receipts for fuel based on a reasonable estimate of the cost per business kilometers travelled.

e.g. 500 kms per tank with an average fill up of 50 litres = 10 kms per litre.

Therefore 15,000 kms / 10 kms = 1,500 litres x $1.95 (average petrol cost per litre in QLD) = $2,925

 

Method 2

SET RATE PER KILOMETRE METHOD

Motor vehicle tax receipt exception: ‘set rate per kilometre method’ 85c per kilometre x up to 5,000 kms.

You must be able to work out your estimate by using a diary or regular pattern of travel.

This means that the maximum claim using this method will be 85c x 5,000 kms = $4,250.

Example:

James is a carpenter and carries bulky equipment to and from work as there is no secure lock up on site. James has kept a log book for 12 weeks which shows his work travel is 95%. James purchased a Toyota Hilux which has a 2 litre engine on 01/07/2019 for $25,000 which he financed through a hire purchase chattel mortgage at an interest rate of 6%. His odometer reading on 30 June 2024 was 25,000 kms and his car does 500 kms on a 55 litre tank of petrol. The average cost for petrol in QLD was $1.95 per litre.

 

Method 1 - Log Book

Fuel 25,000 kms/(500kms/50 litre tank) x $1.95 per litre = $4,875.00

Registration $740

Insurance $650

Interest on loan  $25,000 x 6% = $1,500

Repairs, services & tyres $900

Depreciation $25,000 x 25% = $6,250

Breakdown service RACQ $110

Car washes $120

Total                                       $15,135 x 95% Log book = $14,378.25

E.g. Tax refund x 34.5c (tax rate $45,000 to $120,000) = $   4,960.50

 

Method 2 - Set rate per kilometer

Business kms 25,000 kms x 95% = 23,750 kms

Limited to 5,000 kms x 85c = $4,250

E.g. Tax refund x 34.5c (tax rate $45,000 to $120,000) = $   1,466.25

James chooses Method 1 because he will receive the largest tax refund.

Google ATO work related car expenses
 

DISCLAIMER
The information provided in the above documents is not intended to be, nor should it be construed as tax advice. Any specific recommendation for a client can only be done after their individual circumstances have been determined by David Douglas Accountants.

 

We have clients from the following locations:

Brisbane, Gold Coast, Sydney, Newcastle, Sunshine Coast, Cairns, Canberra, Melbourne, Adelaide, Perth, Darwin.

Other:

Brisbane, Albion, New Farm, Teneriffe, Newstead, Windsor, Wilston, Bowen Hills, Wooloowin, Herston, Lutwyche, Hamilton, Eagle Farm, Gordon Park, Fortitude Valley, Clayfield, Ascot, Hendra.

Morayfield, Burpengary, Caboolture, Bellmere, Wamuran, Narangba, North Lakes, Mango Hill, Kallangur, Dakabin, Deception Bay, Bribie Island, Elimbah, Kippa-Ring.