This information will help you when claiming a deduction for motor vehicle expenses for your business.

The way to calculate your claim depends on your business structure and how you use the vehicle. Sole traders and partnerships use common methods of calculating the deductions. If you are running a business as sole trader or partnership, you can use the cents per kilometre method or the logbook method. If you are a company or trust you cannot use the cents per kilometre or logbook method to calculate your claim. Please also note, these methods are only applicable for cars. For all other vehicles, your claims must be for actual costs for expenses you incurred, based on receipts.

Cents per kilometre method

You can claim a maximum of 5,000 business kilometres per car. The rate per kilometre (66 cents in 2017–18 and 68 cents in 2018–19) takes into account your car running expenses, including depreciation. You can’t make a separate claim for depreciation of the car’s value. You don’t need written evidence, but you must be able to show how you worked out your business kilometres (for example, calendar or diary records). For claims above 5,000 kilometres you must use the logbook method to claim the entire amount.

Logbook method

You can claim the business-use percentage of each car expense, based on logbook records. You must record:

• when the logbook period begins and ends
• the car’s odometer reading at the start and end of the logbook period
• details of each journey including
• start date and finishing date
• odometer readings at the start and end
• kilometres travelled
• reason for the journey.

You must keep the logbook for a period (at least 12 continuous weeks) that is representative of your travel throughout the year. You can then use this representative period to calculate your claim for 5 years if you:

• keep the logbook
• take odometer readings at the start and end of each year that you use it

If you change your business structure, your entitlements and obligations may change. You must apportion your expenses between business and private use. You must keep records for five years to prove your expenses.

Contact us for an obligation free consultation or visit ATO website for more information.