Small business owners when using their car for work purposes can claim car-related expenses on their tax returns. One can use either ‘Cents per Km’ method or ‘Logbook” method to work out expense claims but, in general, the logbook method is likely get you higher tax refunds. The following are some of things one needs to understand before estimating claims under a Logbook Method:
- 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 per car. Log book has to be kept for 5 years as an evidence. If you change car during 5-year period, then a new log book has to be maintained for continuous 12 weeks to calculate business percentage. This also applies in case your business car use has significantly changed.
- The logbook must include the following details:
- Date of each travel.
- Start and finish odometer readings and total kilometres for each travel.
- Start and end time for each travel with reason for each travel.
- Start and end date for logbook period.
- Start and finish odometer readings along with total kilometres for logbook period.
- Business use percentage for the period of logbook.
- Following expenses can be claimed under this method only up to the business percentage –
- Fuel
- Registration
- Insurance
- Car Wash
- Interest on car loan
- Decline in value. Capital costs such as purchase price of the car, principal on borrowed money and additions to the car cannot be claimed, these are included in decline in value.
- Repairs and maintenance.
- Servicing
- Tyres
For further assistance, please contact Taxplanners on 1300 000 TAX (1300 000 829), 03 9600 0143 (10 Lines).
You can also visit our office for assistance –
Melbourne CBD – Suite 411-413, Level 4, 343 Little Collins Street, Melbourne
Werribee Office – 88 Watton Street, Werribee, Contact – 03 901 MY TAX (03 9016 9829)