Tax Return: Car expenses have changed what can I claim?
Tax Return – Knowing what and how to claim your car expenses can be tricky! Here are some helpful tips to get you on your way!
Knowing what you can and can’t claim on your tax return can cause anyone a headache! So here are some tips on what you can and can’t claim for car expenses on this years tax return.
So what is classed as a car expense for tax purposes?
Car expenses are defined as a deduction you can claim for using your own vehicle or leased vehicle within a workplace.
You can claim vehicle expenses directly connected with your day to day work. However you cannot claim for normal trips to and from work as this is classed as private travel.
For example if you have driven into work and are then asked to go and visit a client, you are able to claim your expenses from work to the client and back but not from home to work.
What you can claim on your tax return for car expenses:
- Carry bulky tools/equipment
- Attend meetings
- Deliver items or collect supplies
- Travel between two places of employment
- Travel from one workplace to an alternative workplace ie. another office
- Travel to alternative offices directly from your home
What you can’t claim:
- You cannot claim the cost of travel between home and work because this is classed as private.
Unfortunately for some the rules have changed for the 2016 tax return and from now on you will only be able to calculate your tax return on car costs in one of two ways. You will only be able to claim using either the logbook method or cents per km’s.
On previously tax returns you could claim 12% of the original value of your car, 1/3rd of the actual current market value, you could also claim a logbook for 12 continuous weeks and cents per km.
However that has all changed now and you can only claim car cost by either using the logbook method or the cents per km method. They have also axed the engine size claim, (you could claim more or less depending on the engine size of your car). You can now only claim a fixed rate of 66c per km.
Cent’s per Km Vs the Logbook method, which one is better?
Cents per Km’s Vs Logbook method
Cents per Km’s
- You can claim 5,000km per year
- Not required to keep a logbook
- ATO can ask to audit how you calculated
your claim and how it is work related.
- Must keep 12 continuous weeks
- You must own/lease the car
- You only need to complete the logbook once every 5 years
- Record all business trips and all personal trips
- Keep receipts for
There are many handy tools you can use if you are finding it hard to calculate your car expenses for your tax return?
This tax return calculator can be a lifesaver to help you understand and reach your tax return questions! simple tax calculator
Can I lodge tax return online?
You certainly can!
One of the quickest ways to lodge your tax return is by filling it out yourself and lodging it with the ATO through their website at www.ato.gov.au
If taxes are not really your thing and you would like a professional opinion on how to do your tax return or you just want someone to do it for you it might be best that you contact a tax return accountant for advise.
I have never heard of a MyGov tax return, what is it?
The MyGov website now takes all the online tax returns through their website.
All you need to do is go to the website and follow the prompts to lodge your tax return. There are plenty of resources and information for you to research if you are unsure of anything. There are also some video’s for you to watch if you are finding the information confusing.
When is the tax return deadline?
Your Australian tax return is due to be submitted on the 31st of October.
There have therefore been some significant changes to the way current business’ claim their car expenses on their tax return.
However it appears that the new system has been simplified and although there are less options on how you claim your car expenses the process and lodgment process has improved.
If you do still have questions or are in doubt the best idea would be to contact a tax consultant or accountant and confirm any queries you have.
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Jacaranda Finance does not charge an annual interest rate on SACC loans. These small amount loans incur 'fees' instead of interest. The maximum comparison rate on our loans between $300 and $2000 is 199.43%.WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate
Loan Amount of $1,000 over 6 months repayable weekly (25 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $240 (fees based on 4% per month over 25 weeks) = $1,440 total repayable in 25 weekly installments of $57.60.
Loan Amount of $1,000 over 12 months repayable weekly (50 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $480 (fees based on 4% per month over 50 weeks) = $1,680 total repayable in 50 weekly installments of $33.60.
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Comparison Rate is 20.56% per annum.
This comparison rate is based on a medium amount credit contract of $2,500 repaid over 2 years with a $400 establishment fee and APR of 20.56%.WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate
Loan Amount of $3,000 over 18 months repayable weekly (78 weekly repayments). $3,000 (Principle Amount) + $400 (Establishment Fee) + $555.83 (reducing interest*) = $3955.83 total repayable over 18 months with weekly installments of $50.71.
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