D1 Motor Vehicle Expenses (Car Claim)

It is a deduction for the cost of using your vehicle for work. Provided that you have kept the correct documentation it can be one of the best deductions for your tax return. This can be a big claim for people who live on the Gold Coast with work travel to Brisbane and as such it is an area that the ATO reviews.

What Journey is Claimable?

Travel between places of work maybe claimable

• It must be direct travel so no private stops on the way to home or shopping
• Home maybe classed as a place of business but not so if a room is used in association with that business.
• Travel Between Home and work – Generally not claimable

Exceptions

1. Transporting of Equipment can be claimable

• Not allowed if transported because of convenience, if there is secure storage onsite.
• Is it bulky -clothes not bulky, over 30kgs is a good measure

  2. Itinerant Travel

• Client has a “shifting place of work,” where
• Travelling is fundamental to work
• No fixed place of work, no home base
• More than one workplace each day
• Continually travels from one worksite to another each day
• Uncertainty about where the location of employment is
• Examples are a commercial traveler that sees several clients each day, In limited cases workers in the building industry.

  3. Business Trip

• To visit customers, clients can be claimable
• If the employee has a regular place of work
• The travel is an alternative destination from the regular place of work
• Works at the location

  4. Travel to purchase work items and maintenance is not deductible

  5. Travel on call

• This is a very rare claim if your work starts from home i.e. A Dr starts his treatment of a client at home prior to travelling to hospital. A nurse may not have started their duties until arriving at work.

If the Journey is Claimable at D1 then what are the Methods?

• The claim is for a Car
• Where you can’t claim
• If your vehicle has been salary sacrificed
• If your private journey as per above
• If you have not kept adequate records
• Cost of vehicle over the luxury car limit
• No claim for fines
• No claim for regular drivers license

Definition of a Car

Car (including 4*4), station wagon, panel van and utility truck that carries less than 1 tonne, Any other vehicle that carries less than 1 tonne and fewer than 9 passengers.

There are two methods for cars “log book” & “cents per km”

1. Logbook Method Requires you to

• a. Keep a Log Book (This can be completed by an app like mile catcher https://milecatcher.com/)
• b. Fill in all the details in the logbook accurately (Don’t just complete the information of your journey i.e. car make, model, rego, engine capacity)
• c. You must take down the odometer reading at the start of your logbook
• d. You must also take the odometer reading at the start of the financial year(Or start of claimable period)
• e. You must keep all receipts for expenses for the vehicle. (You can use average fuel cost but this may not give the best claim, keep evidence for 5 years)

Claimable Expenses

• Registration and Insurance
• Interest on money borrowed to acquire the vehicle
• Lease payments
• Road service membership
• Running costs, fuel, oil, repairs, servicing, tyres and cleaning
• Depreciation of the vehicle

Some basic Log Book Rules

• Made in the year that the claim is made, can overlap years.
• Works for four years
• Can elect to upgrade the log book, change in job or change in vehicle.
• Only need to record work entries
• In English

What to include

• Date of journey
• Odometer reading at beginning and end of journey
• Number of kms travelled
• Reason for journey (Be specific)
• 2. Cents per Km methodRequires you to
• a. Keep a Log of your Kms - Make a reasonable estimate (This can be completed by an app like mile catcher https://milecatcher.com/)
• b. Limited to 5000kms (Great if you have travelled small amount of kms and if you have not kept adequate records)
• c. Can’t use if you Don’t own the car i.e. short term hiring (Tip The ATO are ok with this claim if control is in a family group)
• d. ATO are suspicious of claims of 5000km exactly.

Vehicle owned by employer

• Personal expenses paid by the employee for the vehicle are notdeductible
• Claims for jointly owned cars
• The rules above apply to the individual and not the car therefore each individual can access the rules for the car above.
• For logbook
• Kms for person/Total km’s for vehicle * expenses

Where you don’t have to use these methods

• Vehicle is not defined as a car i.e. a taxi, a panel van, a utility that can carry over 1 tonne, private travel for the vehicle is minor.
• Cars that are part of trading stock of business
• Cars that are leased/hired
• Cars subject to FBT
• Unregistered cars