The Tax Office has changed the way you can claim car expenses for 2016 and future years. If you use your car for work you might get a larger tax deduction if you keep a logbook for 12 weeks. You can still claim 5,000 kilometres without a logbook but the top rate per kilometre has been reduced so the maximum claim is $3,300.
From 1 July 2015, there are only two methods available for claiming car expense deductions:
1. Cents per kilometre method
2. Logbook method
Cents per kilometre Method
Separate rates based on the size of the vehicle engine are no longer available from 1 July, 2015. For the year ended 30 June 2016, the only rate to be used is 66cents per km (there were previously three rates based on the vehicle engine size, ranging from 65 cents to 77 cents in 2015).
You can claim a maximum 5,000 business km per car. You don’t need written evidence for the km travelled but you must be able to show how you worked out your business km (e.g. Diary records).
Your claim is based on the business-use percentage of the expenses for the car.
To work out your business-use percentage, you need a logbook and the odometer readings for the logbook period.
The logbook period is a minimum continuous period of 12 weeks. The 12 week period must be representative of your travel throughout the year.
You can claim fuel and oil costs based on either actual receipts or estimates based on the kilometres travelled and average fuel consumption during the year. You need written evidence for all other expenses for the car.
A logbook is only required once every 5 years – unless your pattern of use changes.
Information your logbook must contain
when the logbook period begins & ends
the car’s odometer readings at the start and end of the logbook period
the total number of kilometres the car travelled during the logbook period
the number of kilometres travelled for each journey recorded in the logbook
the start and finish times of each journey
odometer readings at the start and end of each journey
kilometres travelled for each journey
reason for the journey
the business use % you have calculated for the logbook period
the odometer readings at the start and end of each income year you use the logbook method
Should you keep a logbook?
Despite the pain of keeping a logbook for 12 weeks, the benefits could be substantial.
For example, if your logbook demonstrates a work-related car use of 40% and your total car costs for the year (including depreciation) were $12,000, you would be entitled to claim $4,800 deduction. This is compared to a maximum deduction of only $3,300 under the cents per kilometre method.