The Australian Tax Office is cracking down on false work-related car expense claims on their tax after more than $7.2 billion was claimed in the last financial year alone.
The ATO is now promising to put similar claims under the microscope, in a search for false and fraudulent claims.
Here is the Golden Rule Of Car Expenses Claims
The primary rule is that generally trips between home and work cannot be claimed unless you are required to use your car for work for a specific purpose.
“You must have a work-related need to travel while performing your job, like travelling from site to site or be required to transport bulky tools.”
How Are Claims Calculated?
Most car-related expenses on tax are claimed using either the cents per kilometre method or the log book method.
The cents per kilometre method is based on a set rate of 68 cents per kilometre and limits taxpayers to claiming a maximum of $5,000, because claims can be made without receipts.
Taxpayers must show how they worked out their business kilometres — the ATO suggests keeping diary records of work-related trips.
The logbook method is based on the percentage of work use of your car and your actual expenses, the ATO said.
Using this method, taxpayers are required to keep their logbooks which broadly represent work-related car travel throughout the year for a minimum continuous period of 12 weeks.
Receipts can also be used to claim fuel and oil costs, with taxpayers also required to record their odometer readings at the start and end of each income year.
Speak to us before you claim any car expenses on your tax return. We can help you get it right.