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Claiming motor vehicle expenses is a very important part to any business but often businesses don’t know what to claim and how they can. This article is going to explain what vehicles to claim and what methods you can use to claim motor vehicles within your business.
The first step to claiming motor vehicle expenses is knowing if you are in a partnership, company, trust or are a sole trader.
If your vehicle is owned by a company or trust you can claim a full deduction on any of the operating vehicles expenses. However, if the vehicle is also used for private use the company or trust may have to pay Fringe Benefits Tax (FBT).
If you are in a partnership or are a sole trader and have a business purpose vehicle (1.), you can claim 100% of your vehicle costs without accounting for private use.
If you are a sole trader and use your own car for business purposes and do not travel over 5,000 kilometres for business use you have two choices - use a logbook or use the cents per kilometre method. For people who travel more than 5,000 kilometres for business purposes you have 4 options - use the logbook method, use the cents per kilometres (up to 5,000km), 12% of original value method or can use one-third of actual expenses method and claim a third of your car expenses.
To do any of these methods you must :
- Have written records of your expenses
- Keep appropriate records
- Record the vehicle's odometer before and after use
- Record the vehicle’s make, model and engine capacity
- Record the vehicle's registration number
You can choose different methods for different vehicles and can change these methods yearly. To make sure you get the best outcome you can choose whichever method you think is best for your business.
To help calculate what you can claim go onto the ATO website and use the work related car expenses calculator.
Watch the video the ATO has put together to help explain your options:
Let aVers Cloud Solutions take care of your bookkeeping and help manage your vehicle claims. Contact aVers Cloud Solutions on 3314 6047.