Work-related car expenses (2 methods): 2015/2016 

  1. Cents / per km method: maximum 5000km. You do not need written evidence but you may need to be able to show how you worked out your work-related kilometres. You must keep records for odemetres at the beginning and the end of financial year.
Engine capacity Cents per kilometre
Ordinary car 2014-2015Income year 2013-14 income year
1600cc (1.6 litre) or less 66 cents 65 cents
1601cc – 2600cc (1.601 litre – 2.6 litre) 66 cents 76 cents
2601cc (2.601 litre) and over 66 cents 77 cents

2. Logbook method: Use a logbook to calculate the percentage of car expenses by recording the trips for 12 continuous weeks. A logbook is required every 5 years or when your job or circumstances change.  Depreciation of Work Related Motor Vehicles

  1. You may claim the kms for carrying heavy tools from your home to your work place.
  2. Note: The trips to and from your work place are normally not deductible, unless you have a home-based office and you start or end your day’s work from your home. You must also substantiate this fact.

Depreciation of cars for tax purposes can be claimed when used to produce taxable income. Depreciation generally is quite a big subject – read more here: depreciation.

Depreciation:

As a work-related expense, depreciation is one of the operating expenses claimable under the “Log Book” method.

Depreciation, or the ‘decline in value’, is the calculation of the costs to be allocated to each of the years of the vehicle’s use.

  • cost base – generally has its normal meaning, being the amount paid for the vehicle and stamp duty paid.
  • Usual life of the vehicle: according to the Tax Office estimate, the applicable base year
  • the method of depreciation: diminishing value or prime cost method (see below)
  • Consider the luxury car limit

Updates to the depreciation cost limits are released by the Tax Office once a year.

The depreciable cost of motor vehicle is also subject to the Luxury Car Limits, which assumes an upper limit on the cost. If the vehicle costs more than the limit, depreciation is only calculated on the limit.  The limit is:

2014-15 $57,466

2013-14 $57,466

2011-12 $57,466

 Vehicle Depreciation Rate – Commissioner’s Estimate

There is no single vehicle depreciation rate, because the effective life estimate is based on the type of vehicle and the conditions under which it is used. Taxpayers can choose to use the Commissioner’s estimate or to self-assess the effective life.

For the following common types of motor vehicle the current Commissioner’s Estimates of Effective Life for vehicles acquired after 10 May 2006 are:

Vehicle designed to carry a load of less than 1 tonne and fewer than 9 passengers Effective Life (Years) Diminishing Value * Prime Cost
Generally 8 25% 12.5%
Hire & travellers’ cars 5 40% 20%
Taxis 4 50% 25%

* Assets acquired since 10 May 2006 may use a diminishing value rate equivalent to double the prime cost rate

DISCLAIMER
Kasker Associates website is to provide information of general interest to their clients. The content of this website does not constitute specific advice. Readers are encouraged to consult their tax adviser for advice on specific matters.