I use my motor vehicle everyday for work, so that makes it tax deductible - right?
Travel between work and home is not deductible
Unfortunately, even though you can't earn money until you get to your job and you need the car to get there because it's a 200km return trip, it's not tax deductible. Regardless of whether you drive, ride, walk or e-scooter to work, none of it is deductible.
What if I have to drive for work?
If you required to use your vehicle as part of your job to visit clients, make deliveries, pick up the mail, etc after you have driven from home to the office, then yes! You can claim some of your motor vehicle costs using either the Log Book Method or the Cents per Kilometre Method as shown below.
What if I carry bulky items and tow a trailer full of tools I need for work?
Ah, now you're thinking! Yes! This is tax deductible. You could be a music teacher that has to transport a drum kit, cello or other bulky equipment to and from your place of work or to halls for private lessons. You might be a builder or painter and have to transport all your bulky equipment in the back of your SUV, ute or with the assistance of a tool trailer. You can claim a deduction in these instances.
What can I claim?
There are two different methods - Logbook and Cents per Kilometre. Use whichever will give you the highest deduction.
Logbook Method
This is the method used when you're claiming the initial purchase cost of the vehicle. You need to keep a record of every expense incurred for maintaining your vehicle. You can do this using the ATO myDeductions App, using accounting software like Xero if you're running a business, or download a csv file of your bank statements, sort it by 'Payee' and add up the ones for your car. Better yet - see your accountant and they'll help you figure this out. Some online banking apps will also let you categorise these expenses throughout the year and give you a summary at year end. Expenses will include:
Purchase costs
Registration
Insurance
Repairs and maintenance including tyres, services, etc
Fuel
Note: You have to keep a logbook for 3 months every 5 years or whenever you purchase a new car if you don't have a ute (an exempt vehicle) to show the private vs business usage percentage of your vehicle.
Cents Per Kilometre Method
If you are travelling less than 5,000 km per year for work, and you haven't claimed the cost of your vehicle using the actual method in a prior year, then this is the better method for you. The ATO has a current set rate of 85c per kilometre. You can record your travel in the ATO myDeductions App or a diary - whatever is easiest for you. Just make sure you have some way to justify your claim.
More information
To discuss any of the above further, you can ring me on 4021 2801.
'Education is a progressive discovery of our ignorance' - Will Durant