25 June 2019
Work-related car expenses will be on the ATO radar this tax time.
According to the ATO, over 3.6 million people claimed work-related car expenses last year (17-18), equating to more than $7.2 billion dollars worth of claims.
Assistant Commissioner Karen Foat said the ATO has seen “taxpayers claiming for things live private trips, trips they didn’t make, and car expenses their employer paid for or reimbursed them for.”
She warned that “Doing the wrong thing is not victimless. When you claim a refund you’re not entitled to, you’re stealing from the whole community and disadvantaging those who do the right thing.”
The ATO uses benchmarking to assess whether a deduction seems reasonable, compared to others in similar jobs.
If a claim is deemed questionable, the ATO will ask the taxpayer to explain how they arrived at their claimed amount, and in some cases may investigate further with help from the taxpayer’s employer.
When assessing whether you are eligible to claim work-related travel expenses, consider the below:
- As a general rule, trips conducted between your home and place of work are not deductible (except if you are required to carry bulky equipment)
- Make sure you aren’t trying to claim for expenses that have already been reimbursed by your employer
- Keep appropriate records to substantiate how you arrived at your calculated claim.
Carefully consider the two available options for calculating a claim:
Cents per kilometre
- You don’t need receipts, but you do need to provide evidence of trips (e.g. a diary)
- The claim is based on a set rate of 68c per km
- You can claim a maximum of 5,000 km per year using this method, but you still must be able to substantiate your claim
Logbook
- Based on the percentage of work use of your car and your actual expenses
- You must keep a logbook of all you work related trips, as well as a record of your incurred car expenses
- The logbook must record your odometer readings at the start and end of each trip, and also record the purpose of the trip
- You must maintain the logbook records for a continuous 12 week period and it should be representative of your travel throughout the year
- For calculating car expenses, you can estimate based on your odometer readings, or you can use receipts for expenses incurred for fuel and oil
- For car expenses other than fuel and oil, you must keep receipts
- You must be able to substantiate your calculation for claiming any decline in value of your vehicle
Want to know more?
For more information, visit the ATO website, or contact the team at Shakespeare on 08 9321 2111 to discuss how the above may apply to your individual circumstances.
General disclaimer: Our firm provides the information on this website for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles on this website are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose
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