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Claiming Motor Vehicle Expenses

Claiming Motor Vehicle Expenses

As a sole trader or an individual in a partnership who owns a motor vehicle to be used in the business, you are able to claim motor vehicle deductions directly in your tax return. From the 1st of July 2015, there were new rules regarding claiming motor vehicle expenses.

Where previously there were 4 methods of calculating the amount you can deduct, now there are only 2 methods:

Cents per kilometre method

Regardless of the size of the motor vehicle’s engine, you now use a single rate of 66 cents for every business-related kilometre travelled. Private use kilometres are excluded from the calculation. The maximum number of kilometres you can claim is 5,000.

If you are registered for GST, you would be able to claim GST to the extent of the creditable purpose of your motor vehicle expenses. Under GSTB 2006/1 the creditable purpose is calculated by either:

  1. Formula method: Estimated Business Kilometres / Estimated Total Kilometres, or
  2. If no more than 5,000 creditable purpose kilometres are travelled then the following percentages are accepted:


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Creditable KmCreditable Purpose %
0 – 1,2505%
1,251 – 2,50010%
2,501 – 3,75015%
2,501 – 3,75020%

Logbook method

You need to keep a logbook in the prescribed format by the ATO for a minimum continuous period of 12 weeks to determine the business % from your total usage of the vehicle. This business % determines the amount you can deduct from the cost of maintaining and owning your vehicle, such as: fuel and oil, insurance, registration, repairs and maintenance, and where eligible, depreciation cost of the vehicle and interest on any finance taken out for the vehicle’s purchase. This percentage is also used to determine the maximum amount of input tax credits (GST) you can claim on the expenses.

If the vehicle is owned by a company or trust and it is available for private use by you or any other person who is the employee of the company or the trust, the business will also need to consider the effect of Fringe Benefit Tax rules on this arrangement.


Contributed by Helene Kosasie[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

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