Prior to July 1, 2015, there were four methods for claiming car expenses which included:
- cents per kilometre - capped at 5000 business kilometres;
- logbook - unlimited kms;
- 12% of original value; and
- one-third of actual expenses.
From 1st July 2015, the last two methods have been abolished leaving the cents per kilometre method and the logbook method as the only two available.
The cents per kilometre method
The cents per kilometre method has been simplified to use a standard rate of 66 cents per kilometre for the 2016 income year no matter what the vehicle’s engine capacity is. The number of work related kms is multiplied by this rate to calculate the deduction.
Taxpayers using the cents per kilometre method of claiming car expenses only have to show how they worked out the work related kms (ie. producing diary records of work related trips).
The logbook method
Under this method, the claim is based on the work-use percentage for the car. Expenses include running costs, depreciation and interest on borrowings if applicable. Written evidence is needed for all other expenses for the car.
To work out the business-use percentage, a taxpayer will need a logbook and the odometer readings for a minimum continuous period of 12 weeks noting business related travel.