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Monthly tax tip:
The ATO are certainly coming down harder this financial year on audits and one area that is in the spotlight is motor vehicle expenses. A taxpayer can claim one of two methods available for each car used to produce taxable income. The cents per kilometre method is quite popular as there isn’t much record-keeping involved. This method allows kilometres driven (for taxable purposes) to be claimed under a set rate up to a maximum of 5000kms. However, the most common error that we find taxpayers making with this method is claiming the maximum of 5000kms without records or proof that they did actually drive that distance for work purposes. Another common error with this method is that it is only available for cars. A motorcycle or vehicle that is designed to carry either one tonne or more, or nine passengers or more is considered an other vehicle and can only claim the logbook method. The logbook method allows a taxpayer to claim a portion of all vehicle costs (e.g. fuel, insurance, registration, etc). A logbook must be kept for twelve weeks which records all trips made by the taxpayer. These records can then be used to correctly calculate the portion used for taxable purposes. The calculation can be used for three years unless the taxpayers situation changes. Motor vehicle expenses can add up to a great deduction so it’s important that calculations are made correctly. Please contact our office if you would like to discuss your motor vehicle deductions and the options available to you.
If you would like to schedule a consultation with us then please jump onto our website where you can see our availabilities and book a time that suits you.
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