Car expense deductions are a great way to legitimately decrease your tax bill or maximise your refund. However, deductions only apply to kilometres travelled for business. Travel from home to work or work to home are not deductible. Attending meetings, running business errands and the like are deductible.

We have clients in the past who have heavily branded their car with work logos believing that they are able to deduct 100% of their car expenses. Unfortunately this is not the case!

Deductions are based on four different methods:

  • Cents per kilometre (limited to 5,000 business kms per year)
  • 12% of original value (this can be used if you travelled more than 5,000 business kms per year)
  • One-third of actual expenses (this can be used if you travelled more than 5,000 business kms per year)
  • Logbook method (this requires a logbook to be kept over a continuous 12 week period; the logbook can last for five years as long as it still represents continued use of the car).

We suggest for those individuals who do use their car extensively for work in terms of kilometres travelled, log books are good. For those who do not use their car extensively, please call us on +61 3 8319 4076 to determine which deduction method to apply.