Claiming the cost of running your car for work related purposes or in your business.CATEGORY: Article

You can choose one of two methods to work out your car expenses. The two methods are either:

• cents per kilometre method (restricted to claiming up to 5,000 business kilometres per car per year only)
• logbook method.

Both methods require you to know or estimate your business kilometres. The records you need to keep will depend on your estimated business kilometres travelled. However, your claim at the end of the income year will depend on your actual business kilometres. If you cannot estimate your business kilometres, you should keep documentation as required by the logbook method. This will ensure that you can claim under the method which gives you the greater deduction.

Cents per kilometre method

You need records showing how you calculated business kilometres travelled and the amount of the claim – for example, diary entries and documents you can use to show the engine capacity of your car.

Logbook method

For each year you need:

• odometer readings for the start and end of the period being claimed
• business usage percentage based on the logbook
• receipts or other documents showing fuel and oil expenses, or a reasonable estimate based on odometer readings
• receipts or other documents showing other expenses for your car – for example, registration, insurance, lease payments, services, tyres, repairs, interest charges.

Your logbook is valid for five years. If this is the first year you are using this method (or the five years has expired) you will need to keep a logbook for this year. The logbook must cover at least 12 continuous weeks and show:

• when the logbook period begins and ends
• the car’s odometer readings at the start and end of the logbook period
• the total number of kilometres travelled in the logbook period
• the number of kilometres travelled for work activities based on journeys recorded for the period in the logbook. You need to record the start and finishing times and the odometer readings at the start and end of the journey, kilometres travelled, and the reason for the journey
• the business-use percentage for the logbook period.

You also need to monitor the pattern of your car usage during the year and adjust the business-use percentage accordingly. For example, your business use is likely to vary during a holiday period.