The law in regards to motor vehicle usage for work can be quite complex. Under certain circumstances you can claim a deduction for expenses that you incur in using your car for work. Regardless of what you may hear from friends and family, it is important to know you are legally allowed to claim motor vehicle usage so you do not put yourself at risk of being audited by the ATO.
Ordinary travel to and from work is not a work-related car expense, even if:
• You have to travel between home and work more than once a day.
• You are required to travel to work outside normal business hours.
• You were on call.
• There was no public transport near work.
• You did minor work-related tasks at home or between home and your workplace.
You are entitled to claim motor vehicle usage:
• Between two separate places of employment (for example, when you have a second job).
• From your normal workplace to an alternative workplace while you are still on duty and back to your normal workplace or directly home.
• From your home to an alternative workplace and then to your normal workplace or directly home (for example, if you travel to a client’s premises to work there for the day).
If the travel was partly private, you can only claim the work-related part.
In the instance that one of the above applies to you, and you are reimbursed by your employer, you will not be able to claim a tax deduction unless your actual vehicle expenses are greater than the reimbursement amount.
If you are entitled to claim motor vehicle usage and have not been reimbursed by your employer there are four methods to work out your car expenses. If you qualify for more than one method, you can use the one most convenient for you or whichever gives you the largest deduction.
The four methods are:
• Cents per kilometre
• 12% of original value
• One-third of actual expenses
Remember to make sure you have written evidence for all your car expenses (diary entries, receipts or invoices). You also need to own (even if it is not registered in your name), lease (even if it is not in your name) or hire a car under a hire-purchase agreement in order to be eligible to claim motor vehicle usage for work.
If you are unsure as to whether you are eligible to claim motor vehicle expenses for your work, our professional accountants can provide you with advice on lodging your tax return in order to legally maximise your tax deductions. Call us on 1300 QUINNS (1300 784 667) to arrange an appointment or submit an online enquiry.