Are you an Australian car owner considering the complexities of tax returns, wondering if there’s a road to optimising your returns through car-related deductions? The Australian Tax Office (ATO) has laid down specific guidelines on what can and cannot be claimed when it comes to car loans.

So we decided to share a blog to learn the secrets surrounding car loan deductions, seeking answers to the burning question: Can I Claim a Car Loan on My Tax Return? So let’s check out!

1. Work-Related Car Expenses: Maximising Deductions

As an employee, knowing when you can claim car expenses is essential. While daily commutes between home and work are typically non-deductible, certain work-related trips can be claimed. This includes travel between job sites, delivery or pickup tasks, and attending conferences or meetings. If you have multiple places of employment, you can also claim travel between them.

Methods Of Deduction:

• Cents per Kilometre Method: Claim deductions based on work-related kilometres travelled, up to 5,000km. No evidence is required, but a record of how the calculation was made is essential.
• Vehicle Logbook: For more extensive expenses, maintain a logbook for a minimum of 12 weeks. Include all relevant details such as expenses, business use percentage, odometer readings, purchase price, borrowed money details, repayments, fuel costs, and oil expenses.

2. Car Leasing And Tax Deductions

Even if you lease a vehicle privately, you can still claim work-related travel expenses. In the case of business leasing, claiming GST from rental fees is possible. The deductibility of the lease depends on factors such as the amount financed concerning the depreciation limit. Understanding the tax implications of car leasing is essential for maximising deductions.

3. Buying a Business Car: Capitalising on Deduction Opportunities

For small businesses, the ability to claim deductions for individual assets valued at less than $20,000 offers a significant opportunity. This means that if a vehicle is purchased for less than $20,000 before the end of the financial year, and registered as a business purchase, the full amount can be claimed. Explore car finance options to make the most of this deduction before the limit reverts to $1,000.

Conclusion

As a car owner, when you dive into tax return preparations, it’s crucial to navigate the realm of deductions with caution. Understanding the frequency of business use, drivers, and garage locations is essential for accurate claims. While the ATO provides routes to optimise returns, it’s imperative to ensure eligibility before making claims. And if ATO conducts a thorough check and finds incorrect claims, it can result in significant penalties.

In such a case, if you require any help concerning filling your tax return properly and are unsure of possible deductions, you may consult KPG Taxation. Their expert tax accountants can offer you peace of mind!