Do you have tax deductible motor vehicle expenses?
A reminder to our Geelong Accounting clients with tax deductible motor vehicle expenses, it may be beneficial for you to start a motor vehicle log book.
In the May 2015 Federal Budget there were changes made to the way motor vehicle deductions for individuals could be claimed. These changes took effect from 1 July 2015.
Previously you could choose from one of four methods:
- The logbook method, where the business portion of expenses are claimed as a tax deduction. The business portion is determined by a logbook kept for 12 weeks, which can then cover you for up to 5 years.
- The cents per kilometre method, where you claimed a rate per kilometre of business travel, which varies depending on the size of the vehicle. The maximum number of business kilometres is 5,000 and the rate varies from 65c/km to 77c/km. (Now a flat rate of 66c/km)
- The 12% of cost method, where you can claim 12% of the original cost of the vehicle, so long as you do more than 5,000 business kilometres. (Option no longer available)
- The 1/3rd method, where you can claim 1/3rd of the costs of the vehicle, so long as you do more than 5,000 business kilometres. (Option no longer available)
From 1 July 2015, options 3 and 4 have been removed.
Option 2 has been varied so that the rate is now a flat 66c/km regardless of the size of your vehicle. This means that if you do not have a logbook, the absolute maximum deduction for your motor vehicle you can claim is 5,000 x 66c = $3,300.
Based on these changes, anyone claiming motor vehicle deductions in their tax return should seriously consider starting a 12 week logbook before 30th June 2016. So long as it is started before 30th June 2016 you can use the logbook for the 2015/16 financial year.
This will at least give you the option to use the logbook method if beneficial.
If you need clarification on claiming motor vehicle expenses as a tax deduction, please contact us Tel: 5221 7655 and ask to speak with one of our Geelong Accountants.