As tax time looms, many Australians are scrambling to organise the best pre-tax deals, but many forget the plethora of deductions already available to those who own a car. The savviest car owners know that work related vehicle deductions are becoming more common, however it is important to get it right. If you are a car owner looking for deductions to include in this year's tax return, here is a breakdown of all the ATO approved ways to claim tax deductions on your vehicle.
What can I claim?
Do you travel to work-related journeys, conferences or meetings that aren’t hosted at your company's business address? The travel costs associated with these kinds of movements are partially tax deductible.
The ATO specifies that this includes travelling between two places of employment if neither of them is home. This is perfect for those with a side hustle who drive to and from workplaces through the day. This is even more helpful for those who use their car to travel between alternating work sites on a day to day basis.
Carry tools around in your trunk? If your job requires you to transport bulky or heavy work equipment around in your car, and you aren’t able to store them at work, you are able to make tax deductions on the expenses incurred while moving the tools.
Other expenses you may be able to claim:
- Use your car to pick up, drop off or deliver work-related goods? You can claim deductions on the expenses incurred for these business travels
- Need to travel between your workplace and a client’s premises? This expense can be claimed as a tax deduction
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What can’t I claim?
Unfortunately, you can’t claim car expenses for travel between home and work or vice versa. This is true even for those of us who must travel great lengths between both.
You can’t claim car deductions if you were reimbursed for the same costs by your employer. You can only claim it if you paid for yourself - the ATO doesn’t allow double dipping!
These are other potential barriers for claiming car-related deductions:
- Driving someone else's car to work? You can only claim a portion of the travel-incurred expenses
- Pay for your vehicle under a salary sacrifice or novated lease arrangement? This payment arrangement makes it impossible to deduct from your tax as they are technically already tax exempt
For more information on what you can and can't claim, check out the ATO
website or ask your accountant for more information.
*Please refer to the Australian Tax Office website to see whether your business qualifies for the instant asset write off. Please speak to your tax professional for advice tailored to your individual circumstances.