The ATO has just announced that the cents per kilometre rate has increased to 85 cents per kilometre for 2023/24.
The recap, there are two methods to claim work-related car expenses:
1. Cents per kilometre method
This method is easier for record keeping, involves a more simple calculation, and is generally suited to those with less vehicle use.
You simply keep a record of the number of kilometres you're traveling for work or for business over the duration of the year and you claim these using the set rate.
The drawback of this method is that you are limited to a maximum of 5,000 work-related or business kilometres per year. That gives you a total maximum claim of $4,250. Thus, if you're using your car a lot for work, you may find this method quite limiting.
2. Logbook method
This method can allow for greater claims depending on how much you're using your car for work or business.
However, there are more recordkeeping requirements - the main one being that you must keep a 12-week logbook that records all of your trips, both business and private, for those 12 weeks.
At the end of the 12 weeks, you calculate your work-related or business percentage use, and you can claim that percentage for all deductions for your car.
you also need to keep all receipts for fuel, insurance, registration, interest, and servicing throughout the year.
As mentioned, despite the additional effort, it can often lead to a greater claim if you are using your car a lot for work and business.
Comparison
Cents per km method
Pros:
Cons:
Logbook method
Pros:
Cons:
Summary
As you can see, both methods have their downsides and can have their benefits too depending on your situation. consider which is best for you, taking into account:
GET IN CONTACT
22 Garden Street,
PO Box 1669,
Southport, QLD 4215
Australia
Liability limited by a scheme approved under Professional Standards Legislation