How to claim vehicle expenses properly for the ATO: business vs personal use
Claiming motor vehicle expenses is one of the untapped tax deductions many taxpayers miss. However, you can claim expenses in this category that are only incurred for earning income. Thus, keeping those costs distinct from private use is essential to compute the actual claimable amount. Mastering how to claim your vehicle expenses is essential for maximizing deductions. But it could be a confusing maze for you, thus requiring the help of a Tax Accountant South Morang seems invaluable. A professional can choose a viable claiming method, ensuring you have the necessary records. This can prevent overclaiming, which results in an ATO audit.
Claiming Vehicle Expenses by Choosing the Right Method
It is crucial to know that the Australian Taxation Office (ATO) won’t allow you to claim vehicle costs for personal use. Hence, you must keep a separate record of the vehicle used for work purposes. The services of a CPA Tax Accountant South Morang to identify an accurate way to calculate claimable expenses, such as:
- Cents Per Kilometer
This is a simple way to compute the claimable amount through a set rate. ATO has approved a rate of 88 cents per kilometer for tax assessment years 2024-2025 and 2025-2026. But you can claim an expense maximum of 5000 km of traveling per car each year. Under this method, you don’t need to keep records of individual costs. The set rate is all-inclusive of car running, fuel, maintenance, insurance, depreciation, etc. You cannot claim these costs associated with travel separately. Thus, it’s best if you travel for 5000 km or less each year.
- Maintaining A Logbook
You can do Tax Planning South Morang by using the method of a logbook if you travel more frequently. This method can actually help you with claiming a larger amount of vehicle expenses. However, this could be a complex method than the former one, so keeping with expert insights is necessary. You must keep a logbook for the period of at least 12 continues weeks. It determines your business-use percentage of the vehicle for each trip kilometers and the odometer reading is noted. Thus, you can claim expenses in a wholesome manner without considering the kilometer cap.
Know what you can claim and what you cannot by Kirpa Tax
You should not only be familiar with vehicle expense calculation. But you must know which expenses you can claim and which cannot. Thus, South Morang Tax Accountant lets you have clarity of claimable and non-claimable expenses, including:
Claimable
- Trips between different workplaces for attending meetings
- Claim expenses incurred for collecting business supplies
- Toll charges and parking costs incurred during business trips
Non-claimable
- Commuting between your home to work daily
- Expenses incurred by you that are reimbursed by your employer
- Any part of the expense incurred that is for personal use
Consult us for South Morang Tax Planning to maximize your claimable deductions. We are here to give you valuable advice on motor vehicle expenses. Thus, you can have clarity and assurance not to claim over than approved expenses by ATO. Also, it helps you to meet tax compliance as per regulations.
FAQ’s
Who can claim work-related expenses from the ATO?
If you are a sole trader, a partnership firm, or an employee, you can claim expenses. Consult a Tax Accountant South Morang for accurate computation of expenses.
What are the right methods of computing motor-vehicle expenses?
You can claim vehicle expenses using a logbook method or consider cents per kilometer. Both are reliable techniques and can suit your specific work-related traveling.
Is there a travel limit for claiming my vehicle expenses?
You can claim maximum travel of 5000 km for each car in a year. Get more guidance from CPA Tax Accountant South Morang Kirpa Tax today.
What details must I record in a logbook of traveling?
You must record travel date, odometer readings, kilometers traveled, and purpose. You can also use a digital logbook for maintaining business travel records.
How can you help me claim work-related expenses?
Kirpa Tax picks the best method to compute the claim for your work-related costs. We make Tax Planning South Morang by identifying every eligible business expense you have incurred.
Is the depreciation of my vehicle considered a claimable expense?
Yes, you can, but it depends on the method of computing expenses you have chosen. It’s better to seek the expert help of Kirpa Tax in this regard.
What if I overclaim vehicle expenses from ATO?
As per the South Morang CPA Tax Accountant, you should return the overclaimed amount. If not, then ATO may audit your tax return and impose penalties for the same.