What motor vehicle expenses can you claim at tax time?

Do you visit different sites as part of your job, but your employer is not paying you to travel between those work sites?

You can lodge a claim with the ATO (Australian Taxation Office) to offset the tax you pay over the course of a financial year.

Maybe you’re a hard-working courier, or you could be a part-time truck driver working in two nearby depots.

Whatever the case, if you’re using your own car to reach a work site or you lease a car, you’re entitled to be reimbursed for the car’s running costs driving between points A and B, provided both points are work addresses and you’re not reimbursed by your employer.

And you can claim the costs even if you’re driving a car belonging to someone else, according to the ATO, as long as you’re actually out of pocket replacing the fuel purchased by the vehicle owner.

According to the ATO, a car is defined as a vehicle that carries a payload less than one tonne and seats fewer than nine passengers (or eight passengers and the driver, to be precise). You may claim expenses for a vehicle that isn’t defined as a car, in the case of a minibus, one of the larger American utes or a motorcycle, to offer three examples.

The ATO spells out the circumstances in which you can legitimately claim expenses for using your own car to drive between work sites on this web page, and there’s a brief video you can watch here if that’s more your style.

In the event that you are claiming the car as an expense for your business, rather than as a private individual, check out the pertinent info here.

As a private vehicle owner, and provided you are driving between two or more work-related destinations during the day, you are eligible to claim expenses on your tax return at the end of the financial year.

The ATO won’t recognise claims for driving between home and work (and return), unless there are extenuating circumstances, which are summarised below.

When you can claim expenses driving from home
• Your home is also your base of employment and these three conditions apply:
? Your duties commence at home before travelling to your regular work site
? Working at two locations is in the nature of your employment
? The travel to your regular place of work is not a normal commute (ie: out of hours, collecting parts, et cetera)
• You undertake itinerant work – driving from home to one site, but returning home from a different site
• You are required to carry bulky tools or equipment for work and:
? The tools/equipment are essential for to perform your work
? The tools/equipment are bulky and can only be transported conveniently in a motor vehicle
? There is no secure storage for the items at the workplace
? You have no choice but to take the tools/equipment home

There are two ways of calculating what you’re owed: the ‘Cents per kilometre’ method and the ‘Logbook’ method.

The ATO goes into some detail on this subject. But in summary, you can claim up to 5000km of travel per year using the cents per kilometre method, and you will be reimbursed 85 cents for each kilometre travelled during the past financial year.

This amount covers not only fuel, but other running costs – maintenance and repairs – as well as registration, insurance and vehicle depreciation. The ATO accepts this method of calculating your claim without receipts, provided you record each trip in a diary or using the ATO’s myDeductions tool, an app downloaded to your smartphone. In addition, the taxpayer is required to supply proof of vehicle ownership – typically a copy of the car’s registration paperwork.

For the logbook method, the taxpayer can claim running costs and depreciation. As the name of the method indicates, the driver making the claim must keep accurate records in a logbook over an unbroken period of at least 12 weeks. Each record should comprise odometer readings at the start and end of each journey, the destination and the reason for travel.

This is an easier method to use if your travel rarely varies and you’re visiting the same worksites each week over an extended period.

The data you record in the logbook is valid for five years, and can carry over for the subsequent four years with odometer readings for just the start and the end of the 12-week period, noting also the percentage of travel that is work-related. In the event that you move house or take a different job elsewhere, you will have to commence a new logbook for that specific financial year.

As with the cents per kilometre method, you can maintain hard-copy records, or enter the information using the ‘myDeductions’ app.

Finally, should you receive a car allowance, that is likely considered by the ATO to be taxable income, and it must be included in your gross salary for the year when you are preparing your tax return.

This article contains general information only. Seek independent financial advice that considers your own circumstances.