Keeping up to date records, the key to claiming Motor Vehicle Expenses.

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We trust you’re enjoying our tax planning series and that our editorials have provided you with some ideas that you can implement to assist you with improving your financial outcomes.  Remember, we love doing tax planning for our clients so please take advantage of our special offers during this series.Today’s topic is on Motor Vehicle Record Keeping.  We outline the 2014/2015 tax benefits and the changes to the 2015/2016 Motor Vehicle Record Keeping Requirements.

If you have missed any of the previous editorials you can view them at
http://www.mcmahonosborne.com.au/www/content/default.aspx?cid=1010

Today’s strategy is targeted at Motor Vehicle Record Keeping.  If you are claiming a deduction for using your own car (including a car you lease or hire), it is treated as a car expense.

For the 2014/2015 Income Tax Year there are 4 ways in which you can claim legitimate Motor Vehicle expenses in your tax return, these are:

1. Cents per km
2. 12% of the cost of the vehicle
3. One-third of actual expenses
4. Log Book method

From 1 July 2015 (for the 2015/2016 Income Tax Year and moving forward), there will only be 2 ways in which you can claim legitimate Motor Vehicle expenses, these are:

1. Cents per km
2. Log Book method

The following outlines the records required in order to substantiate a deduction for your motor vehicle. We have listed all 4 claim methods for assistance with requirements for your 2014-2015 Income Tax Return.

Method When to use it
Records Required
Cents per km If your business travel is 5,000km per vehicle or less per year
  • Ownership
  • Details of how you calculated your claim
Log Book Method Anytime- generally used when 5,000km per year is exceeded but can be used by anyone
  • Ownership
  • A logbook covering a continuous period of at least 12 weeks
  • Loan interest or lease details
  • All maintenance expenses
  • Registration and Insurance
  • Fuel Expenses- keep receipts or estimate based on odometer records at start and end of year
  • Once completed, the logbook works usage percentage may be used to calculate your vehicle expense claim for up to five years
12% of cost of vehicle If your business travel exceeds 5,000km each year
  • Ownership
  • Cost of Vehicle (your purchase price, not original purchase price if bought 2nd hand)
  • Details of how you calculated your km usage
One-third actual expenses If your business travel exceeds 5,000km each year
  • Ownership
  • Loan interest or lease details
  • All maintenance expenses
  • Registration and insurance
  • Fuel expenses- keep receipts or estimate based on odometer records at start and end of year
  • Details on how you calculated your km usage

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