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How do I get a tax deduction for my car repayments & costs?

From July 2015, there are three methods under the ATO guidelines for tax deductions on car repayments and costs:

1. Cents per kilometre method
2. Logbook method
3. Novated lease

Cents per kilometre method

With the ATO’s revised method, the individual’s use is 68 cents per kilometre for all motor vehicles.

• Your claim is based on 68 cents per kilometre for the income year
• You can claim a maximum of 5,000 business kilometres per year
• You are not required to have written evidence (i.e. logbook) but you may be required to produce evidence of work-related trips (i.e. receipts, etc)

Logbook method

Your claim is based on the percentage of business-use expenses for the car.

Expenses such as running costs and depreciation of the car are included as an expenses but not the purchase price of the car, financing or modifications (i.e. alloy wheels) to the car.

As you need to work out the business-use percentage, this is where the logbook comes in. You will need odometer readings for the period with a minimum continuous period of 12 weeks.

You can claim fuel and oil costs with actual receipts or you can estimate your expenses based on odometer readings.

Lastly you will require written evidence (i.e. receipts) for all other car related expenses such as maintenance, servicing etc.

Novated lease

If you are an employee and receive a salary you can bundle up all of your vehicle running costs including finance and get a tax deduction for the cost of running your car.  You can also forget about having to use the cents per kilometre or logbook method with a novated lease and get an even bigger tax deduction.  Check out further information about novated lease with our Novate One offering.

Budget One

The One Car Group Budget One service helps with managing and reporting for business vehicle costs.  With the convenience of fuel cards and discounted pre-approved labour and parts rates it provides business with greater certainty over the costs of running their vehicle.