How to Claim Tax Deductions for Car Use and Repairs on Your Tax Return

Need your car serviced before the end of June? Call us now (02) 99795933 to secure your booking. It’s filling up fast.

End of financial year is just a few short weeks away. With that comes the time for income tax returns.
Here are some tips for you to help you maximise your claim.

Vehicle expenses for companies are relatively straight forward, repairs and maintainence are tax deductable.
For the individual you are able to claim some of the vehicle maintaince and running costs for your vehicle.
There are some limitations to this and we advise consulting your accountant however we are aware that indivudials can claim vehicle repairs and maintiance on their tax returns.
Be warned this is not as straight forward as claiming the entire amount you spent on vehicle maintiance and doing so will get you into trouble with the Tax Department. However, if the proccess is followed correctly most people are able to claim a portion of the money spent on vehicle maintainence over the previous year.
Our understanding is that if you use your personal motor vehicle for work purposes at all (excludes travel to and from work) you can claim a percentange of the fuel costs incured.  Below are the two approved methods of calculating this. (content stolen from https://www.etax.com.au)
In the same manner if you have used your motor vehicle for work purposes we are of the understading that you can claim a depreciating amount of the repairs carried out on your vehicle over the past 12 months using the “log book method” listed on the ATO website.
This means for most people a portion of servicing of you car can be used as a tax deduction. Provided you have used your vehicle for work related tasks. Going to the bank, post office etc.
How to calculate fuel usage deductions; 

Kilometres used in a personal car doing work related tasks:
Source https://www.etax.com.au
Cents per Kilometre Method
  • Claim up to 5000km per year using this method
  • No log book required
  • ATO can ask you to explain how you calculated your claim and how the use of your car was work related
  • You can claim 66c per work related km

Example: Julie is an administration officer for a small business. Each day she does 4 trips in her car to collect/drop off the post and do the banking. She drives approximately 14km per day in work related travel.
Therefore Julie can claim:

  • 14km X 5 days = 70km p/week
  • 70km per week X 48 weeks (Julie has 4 weeks leave each year) = 3360km
  • 3360km X $0.66 = $2217.60

This means at item D1 Julie can claim a car expenses deduction about of $2217.60

Car Logbook Method

  • Keep a logbook for 12 continuous weeks
  • You must own the car
  • You only need to complete the logbook process one time every five years (or less)
  • Record all business trips AND all personal trips in your car logbook
  • Keep receipts for all expenses related to your car, including
    • Petrol
    • Registration
    • Insurance
    • Servicing
    • Interest on loan costs
    • Depreciation
    • Other running costs

Once you complete your logbook, it is possible to calculate your business-use percentage (that is the ratio, or percentage split, between between work and personal driving). Then you claim the business percentage of all expenses related to your car.
Example: Jeff is a sales manager and he kept a logbook for 12 weeks recording both work and personal trips. After that 12 weeks, Jeff added up the total kilometres travelled on work-related trips. Then he added up the total mileage. Next he divided work kms by total kms and that is his work-related percentage. For Jeff, it is 85%.
Jeff travelled 1000 km in total during the 12 week logbook period. He travelled 850 km on work-related trips.

  • 850km divided by 1000km = 85%

Jeff adds up the receipts for all of his car expenses for the year, which total $8,350. Then he multiplies that by 85%, his work-related percentage.

  • $8350 x 85% = $7097.50

Jeff can claim $7097.50 worth of car expenses at Item D1 on his tax return.

Would You Like To Speak With The GDL Team?

Simply choose the option below that suits you best.

OR

Request A Callback

Enter your name and mobile below and one of our team will call you within 15 minutes!*

*During business hours

  • This field is for validation purposes and should be left unchanged.