Each year approximately 870,000 tax payers claim the maximum amount of kilometres for work related travel using the cents per kilometre method. With the ATO looking for every available dollar of tax, we’ve seen an increased review of taxpayers claims for car use for work purposes. There are 2 methods for claiming a car tax deduction against your employment income. The focus of this article is on the cents per kilometre method.
- uses a set rate for each kilometre travelled for business
- allows you to claim a maximum of 5,000 business kilometres per car per year
- doesn’t require written evidence to show exactly how many kilometres you travelled (but the ATO may ask you to show how you worked out your business kilometres, for example diary records)
- uses a rate that takes all your vehicle running expenses (including registration, fuel, servicing and insurance) and depreciation into account
The current rate of claim for the 2019 and 2020 financial years is 68 cents per kilometre.
You can claim a deduction for work-related car expenses if you use your own car in the course of performing your job as an employee – for example, to:
- carry bulky tools or equipment (such as an extension ladder or cello) that your employer requires you to use for work and there is no secure storage available at work
- attend work-related conferences or meetings away from your normal workplace
- deliver items or collect supplies
- travel between two separate places of employment, but not if one of the places is your home (for example, when you have a second job)
- travel from your normal workplace to an alternative workplace (that isn’t a regular workplace) back to your normal workplace or directly home
- travel from your normal workplace or your home to an alternative workplace that is not a regular workplace – for example, a client’s premises
- perform itinerant work.
Travel from home to work is generally not tax deductible.