How to Claim Car Expenses

Friday, November 4, 2016

Many small business owners use their car for their work; travelling in between meetings, making deliveries and running errands to keep the business on track.

If you’re one of many small business owners that spend parts of the day behind the wheel for work purposes, the Australian Tax Office (ATO) will allow you to make a claim on your tax return for some car-related expenses. If everything is recorded correctly, you’ll also see a greater return on your tax refund.

The trick to claiming some of your car expenses on your tax return is using the car logbook method. Put simply, a logbook will allow you to easily track your car usage and it’s also only one of two recording methods that the ATO will accept.

So, how does the logbook method work?

Using a logbook, your tax deduction claim will be based on your car’s “business use percentage”, which will indicate the percentage of kilometres you travel in your car for business purposes.

To calculate your business use percentage, you will need to keep a logbook for a consecutive twelve-week period.

There are also another few key rules that you must follow to ensure the ATO will accept your logbook:

You must record every trip you take in your logbook – not just those for business-related trips.

You must include these details:

Date for each trip
Start and finish times for each trip, as well as the odometer readings
Total number of kilometres travelled for each trip
Brief explanation for each trip
Start and finish dates for the logbook period, as well as start and finish odometer readings
Total number of kilometres travelled throughout the logbook period
Business use percentage for the period.

The logbook does sound like a lot of effort, but the time taken to record a few simple details each time you get behind the wheel will be worth it come tax time.

Also, if your business use percentage remains consistent, you’ll only need to complete a new logbook for one 12-week period every five years!

If you want to know more about how a logbook works, contact the SWAG team.

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