Maximising travel expense claims

Written on the 14 April 2014 by Macmillans Waller Fry - Accountants in Maitland

Employers and individuals using a vehicle for work may find it useful to consult ATO guidelines when claiming work related travel expenses.

Individuals and business owners may be able to claim car travel expenses in the following circumstances:

  • If they have to carry bulky goods or equipment back and forth to work that cannot be left at the workplace
  • Use a vehicle for work purposes
  • Are a home based worker
  • Require different vehicles to travel to different offices
  • Travel between business locations during the day

Claimants should account for any allowances provided by employers or businesses for work travel and deduct only the private portion of the trip. If the estimated travel will be more than 5,000km, the ATO recommends using one of the following methods which will give the greatest deduction.

If a taxpayer is unable to estimate their business kilometres at the start of the income year, the ATO recommends that documentation is kept as required by the logbook method.

Cents per kilometre

The ATO provides a rates per business kilometre table which calculates the cents per kilometre of the car’s engine capacity With the Fringe Benefits Tax deadline fast approaching, small businesses should review some of the key FBT issues.The FBT for the year ending 31 March 2013 is 46.5%, on the grossed-up taxable value of fringe benefits provided to employees during the FBT year. Common fringe benefits exempt from the tax include: Newspapers and periodicals provided for business purposes Workers compensation
multiplied by the number of kilometres travelled. A maximum of 5,000 km can be claimed each year with diary evidence to show how the rate per km was worked out. This method is best for those making a few trips a year with the maximum claim being $3750.

12 per cent of the original value

Using this method, the claim is equal to 12 per cent of the cost of the car. This method may be more appropriate for those who have purchased a new vehicle and have travelled more than 5,000km that year.

The maximum claim is 12 per cent of a vehicle costing up to $57,466, and requires evidence of how the business kilometres were calculated.

One third of actual expenses

his method may best apply for those who have travelled more than 5,000km in a year in an existing vehicle. A third of the costs
Work site medical facilities Meals provided by the employer and consumed on work premises Minor benefits less than $300 that are provided infrequently Work related items such as protective clothing, briefcases, calculators, tools of trade, notebook computers, electronic diaries and personal organisers Taxi travel to and from workSelf assess liabilityFBT is a self assessment system, with large penalties for underpayment. Certain employers may pay FBT by instalments. An Maximising travel expense claims
of running the car such as fuel, registration, insurance, services and maintenance can be claimed with the submission of written evidence and invoices as proof.

Logbook method

The requirement is that the logbook be kept for 12 weeks, which serves as sufficient record of usage with the same car for the next five years.

The logbook helps calculate the business percentage usage of the car which should be somewhere between 80 to 95 per cent, and allows most running and maintenance, finance costs and depreciation or lease expenses to be claimed.

This method leads to the largest tax deduction as long as all receipts are kept and the logbook entries can be substantiated.Like most self assessment claims, it is up to the claimant to keep thorough evidence to support any deductions submitted to the ATO.


Author: Macmillans Waller Fry - Accountants in Maitland




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