If you find yourself traveling a considerable distance by car to get to work, or even as part of your work you may want to consider tracking your travel in order to claim some money back on tax. There are a couple of ways to do this.
Claiming car expenses: How does it Work?
If you are looking for the simplest way to claim back some money on your work travel time, your best bet would be to use the “Cents per kilometre method”. If you decide to go ahead with this method, you will have to keep in mind that the following points will apply:
- Your claim is based on a set rate for each business kilometre travelled;
- You can claim a maximum of 5,000 business kilometres per vehicle;
- You do not need written evidence to show how many kilometres you have travelled, but the Tax Office may ask you to show how you worked out your business kilometres; and
- You cannot make a separate claim for depreciation of the cars value.
Cents Per Kilometre: How much can I claim?
You may be wondering exactly how much you can claim. If you are consistently traveling a set distance for work every day, all you have to do is take note of the kilometres you are traveling during that day, and multiply that number by the amount of days you work during the financial year you are looking to claim.
How many cents to a kilometre?
The current going rate for cents to a kilometre in the 2016/17 financial year is 66c/km. So how much money should you expect to get back using this method? Use our solution below!
(66 cents x Your Daily Kilometres) x The amount of days you’ve worked during that financial year
If you were traveling 15 kilometres a day, you would have $69.3 accrued just for that week (7 Days) of driving. This calculation can be used quite easily if your travel distance (km) is consistently the same every day.
If you are traveling different distances every day, it would be wise to keep note of the distances you travel in order to properly estimate exactly how much you are going to be able to claim back. Keep in mind that you can only achieve a maximum of 5000 kilometres on the cents per kilometre method.
You cannot make a separate claim on your car concerning depreciating of the cars value.
The Logbook Method: Claiming more than 5000 Kilometres
In order to acquire a greater deduction for your cars travel expenses, it is beneficial to keep a travel logbook. In order to correctly track your kilometres you will need to keep:
- a logbook to calculate the business use percentage
- odometer readings for the start and end of the period you owned or leased the car, and
- written evidence for all car expenses, except for fuel and oil costs.
Your logbook is only valid for five years. You must have kept a logbook during the first year this method is used. The logbook must cover at least 12 continuous weeks.
If you started using your car for business purposes less than 12 weeks before the end of the income year, you can continue keeping a logbook into the following income year so that your logbook covers the required 12 weeks. If you want to use the logbook method for two or more cars, the logbook for each car must cover the same period.
Your logbook must contain the following information:
- when the logbook period begins and ends
- the car’s odometer readings at the start and end of the logbook period
- the total number of kilometres that the car travelled during the logbook period
- the number of kilometres travelled for work during the log book period based on journeys recorded in the logbook. If you make two or more in a row on the same day, they can be recorded as a single journey, and
- the business use percentage for the logbook period.
You can get a logbook to track your distance from any stationery shop, or you can draw up your own.
© Fitzpatrick Group 2017
Peter Carter – Senior Accountant
Peter is a Certified Practicing Accountant (CPA) and has completed an Advanced Diploma in Accounting and Bachelor of Commerce (Accounting and Finance Law).