Are your car expenses in 2016/17 tax deductible?

If you used your own car for work purposes you may be able to claim a tax deduction for some of your car related expenses. If you used someone else’s car you may be able to claim the direct costs such as fuel as a travel expense. 

If your car was used for both work purposes and private purposes you will have to apportion your car expenses and claim the proportion that relates to work.

Generally, you cannot claim expenses for travel between your home and work – these are considered private expenses – but you may be able to claim expenses for travel between multiple workplaces, of if you used it to carry bulky tools or equipment required for work that can’t be left at work, or if you used your car to travel to conferences or meetings or you used it to collect supplies or deliver items for work.

There are several ways you can calculate your tax deduction for car expenses in the 2016/17 financial year (note that the options changed from 1 July 2015):

  • 66 cents per kilometre travelled for work purposes in the 2016/17 year, up to a maximum of 5,000 kilometres (the cents per kilometre method)
  • by keeping a log book (including odometer readings) for a minimum of 12 weeks and claiming a portion of the car expenses based on business use percentage of the car during that period (the log book method)

If you use the cents per kilometre method you don’t need written evidence to support your claim but you do need to be able to show how you figured out the number of business kilometres you travelled. You may be able to do this using a diary.

If you use the log book method you can claim the running costs of the car, but not capital costs, you can estimate fuel and oil usage based on odometer readings in the log book and you must have written evidence of other expenses.

MoneyBrilliant can help you track your car expenses as well as other tax-deductible expenses so you can claim everything you’re entitled to.

You can get more information on claiming deductions for car expenses from the ATO website or your tax adviser.

This summary has been prepared by MoneyBrilliant Pty Ltd (AFSL 492711). The information in this summary is of a factual nature only. We are not suggesting or recommending that you take any particular course of action in relation to any financial product or service. It does not take into account your personal circumstances or objectives. If you need financial advice or taxation advice you should seek advice from a licensed financial adviser or tax agent. You may also be able to access additional information from the websites of the Australian Securities and Investment Commission (ASIC) or the Australian Taxation Office.

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