As of the 1 July 2015 new legislation was introduced restricting how you can claim your business vehicle use. With the end of the financial year fast approaching, it’s a good time to think about how you will claim your business vehicle trips.
In a nutshell there are now only two ways in which you can claim your business vehicle useage: the logbook method and the cents per kilometre method.
1. The Logbook method
The logbook method is arguably the better method of claiming your business vehicle. This method requires the driver to keep a log of every trip (whether personal or business).
The log book must record:
- The time in which they start and finish driving to the destination
- The starting and finishing odometer reading
- The total number of kilometres driven
- Reason for each journey
- Start and finish dates for the logbook period
- Start and finish odometer readings for the logbook period
- Total number of kilometres driven during this period
- Business use percentage for the period.
This log book must be kept for 12 consecutive weeks, after this time (providing it is deemed valid by the Australian Taxation Office) it is valid for five years.
For this method you can claim running costs of the car and the depreciation, however the purchase cost of the car cannot be claimed under this method.
2. The Cents per kilometre method
The cents per kilometre method changed slightly from 1 July 2015 onwards, the changes include:
- The car type does not change how much you can claim
- A maximum of 5000 business kilometres can be claimed in one year
- You will receive 66 cents per kilometres travelled (for business purposes)
- Although you don’t need an official log of how many kilometres were travelled you must be able to provide evidence of how you worked out your kilometres travelled for business purposes (for example a diary recording business meetings).
Now you are aware of the ways in which you can claim your business vehicle travel ensure that all of this is in order just in time for end-of-financial-year.
If you need any assistance at tax time our experts are more then happy to help you. For a free no-obligation consultation contact us or call us on 07 3862 8777. You can also refer to the ATO website for more information about vehicle expenses.