Important Note:
This method of claiming car costs as a tax deduction was discontinued by the ATO as of the financial year 2015-16.
Late tax returns lodged for 2015 and earlier tax years are still able to use this method.
Have you used your car for work this year, but forgot car expenses to keep a logbook? Don’t stress! You may still be able to claim work-related car expenses without a logbook on this year’s tax return.
How does it work?
You can use the one third of expenses method. This method allows you to claim one-third of each expense you incur throughout the year.
You are entitled to claim any expense you incur if it is classified as work related. I.e. used for work purposes to earn an income. You must keep written evidence for all of your expenses except fuel and oil which we can work out for you based on your odometer records.
Please remember, eligible expenses do not include capital costs such as the initial purchase of the car or improvements to it such as replacing a faulty engine. You are also unable to claim to cost of travelling to and from home and work each day.
How to use this method
If you used your car to drive more than 5,000 business kilometres in the tax year you can use this method. If you only used the car for a proportion of the tax year, simply divide 365 by the number of days you used the car and multiply that answer by your kilometres travelled. The result is the amount of kilometres you would have travelled in a full year. If it is more than 5,000 then you can still use this method.
If your answer is less than 5,000, or you did not travel more than 5,000 business kilometres in the full year, you should use the cents per kilometre method or the logbook method.
Is this method for me?
At Etax Accountants, we rarely recommend the ‘one third of expenses’ method because you can usually get a better result from the other methods (most often the logbook method). However, if you really don’t want to keep a logbook, as long as you have written evidence for your expenses you can use the ‘one-third’ method to help increase your tax refund.
If you need any clarification on using this method or any other aspects of work-related travel expenses, please contact us or email us at [email protected].
Other posts on deductions:
- Can you claim your work uniform as a tax deduction?
- Claiming Self Eduction Expenses as Tax Deductions
- Ironing out laundry expenses
- Assessing your expenses claims when travelling for work
