INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)
Calculating car expense deductions
TABLE OF DIVISIONS
| 1 | Overview of the main points in this Schedule |
| 2 | Choosing which method to use |
| 3 | The ``cents per kilometre'' method |
| 4 | The ``12% of original value'' method |
| 5 | The ``one-third of actual expenses'' method |
| 6 | The ``log book'' method |
| 7 | Keeping a log book |
| 8 | Odometer records for a period |
| 9 | Retaining the log book and odometer records |
| 10 | Situations where you don't need to use one of the 4 methods |
| 11 | Definitions of ``car'', ``car expense'', ``holding a car'' and ``owning a car'' |
Overall key principle
If you owned or leased a car, you can deduct for the car's expenses an amount or amounts calculated using one of 4 methods.
You must use one of the 4 methods unless an exception applies. If you can't use any of the methods, you can't deduct anything for the car expenses. Set out below are the key principles for the 4 methods:
Key principles for the ``cents per kilometre'' method
You multiply the business kilometres the car travelled (up to a maximum of 5,000) by the number of cents per kilometre for the car, which is found in the regulations.
Key principle for the ``12% of original value'' method
You deduct 12% of the cost of the car when you acquired it, or 12% of its market value when you began to lease it. However, the car must have travelled more than 5,000 business kilometres in the income year. You cannot deduct more than 12% of the motor vehicle depreciation limit.
Key principle for the ``one-third of actual expenses'' method
You deduct one-third of each car expense that qualifies as a deduction under this Act. However, the car must have travelled more than 5,000 business kilometres in the income year. You must substantiate the expense under Schedule 2B .
Key principle for the ``log book'' method
You multiply each deductible car expense by a business use percentage based on a reasonable estimate of the number of business kilometres. You must substantiate the expense under Schedule 2B and keep a log book and odometer records. You don't need to keep a log book every year.
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