Claimable Car Expenses in the Construction Industry
Car expenses: If you work in the building and construction industry, you may use your own car for work purposes, which includes transporting equipment and tools, and driving between job sites. This will lead to greater car expenses as you use your car, which can be deducted through your income tax return at the end of the financial year. Correctly calculating your deductions may lead to a greater tax refund at the end of the year.
Car expenses that can be deductible include:
· Repairs and maintenance
· Car service
· Car Registration
· Car Insurance
· Car lease/hire payments
· Interest on loan repayments
of the car
· Depreciation on purchase
price of the car
(if you own the car)
· Work related parking
expenses (keep receipts or claim
up to $200 if each parking charge
is less than $10 each) and tolls.
The total work related car expenses can be calculated using either the Logbook method or the cents per kilometre method.
The logbook method will calculate the percentage that your car is used for work purposes. A physical logbook should be kept to record kilometres travelled for work purposes using odometer recordings.
· The work related kilometres travelled compared to the total kilometre travelled will
determine the percentage your car is used for work purposes.
· The logbook must record a minimum of 12 consecutive weeks during regular business
periods and be updated at least every five years.
Example: Shaun’s logbook shows he travelled 600 km for work out of a total of 1000km travelled over 12 weeks. The percentage that Shaun uses his car for work is 60%. Therefore, 60% of his car expenses are work related deductable expenses.
The cents per Kilometre method is a set rate of 66 cents per business kilometre travelled. A maximum of 5,000 business kilometres can be claimed per car, meaning the maximum deductable amount is $3,300. It is advisable to record how business kilometres travelled is calculated, as the ATO may requests these calculations. If cents per kilometre method is used, you cannot make a separate deduction for depreciation on the car. If you require deductions for work related car expenses greater than $3,300, the logbook method should be used.
Example: Dave travels 4,500km in his own car for work for last financial year. Using the cents per kilometre method, he can deduct $2,970 of car related expenses from his income tax return (4,500km x 66 cents).
It is essential to keep receipts, invoices, and any other evidence of expenses that have been paid throughout the financial year.
At BuildersBooks we can help you create a logbook and guide you with all the information you need when it comes to work related expenses and claimable expenses.
This information is not to be relied upon without speaking to your accountant, tax agent or financial adviser depending on the advice.
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