Australia’s Tax Office (ATO) offers a simplified method for claiming car expenses: the cents per kilometre method.
This method allows you to claim a specific amount per kilometre for work-related travel.
The advantage is that you don’t need to keep detailed records of individual expenses like fuel, repairs, or registration.
The key point to remember is that you can claim up to 5,000 business kilometres per car using the cents per kilometre method without requiring receipts.
Beyond this limit, you’ll need to maintain a logbook to substantiate your claims.
Can I Claim More Than 5,000 Kilometres Without Receipts?
No, you cannot claim more than 5,000 business kilometres using the cents per kilometre method without additional evidence.
If your work-related travel exceeds this limit, you’ll need to keep a logbook to substantiate your claims.
What if I Use My Car for Both Work and Personal Use?
If you use your car for both work and personal purposes, you’ll need to accurately determine your business kilometres.
You can use a logbook or other methods to separate business and private use.
Keep in mind that any kilometres claimed must be genuinely work-related.
What Expenses Are Covered by the Cents Per Kilometre Method?
The cents per kilometre rate covers a range of car expenses, including:
- Fuel
- Car depreciation
- Registration
- Insurance
- Maintenance and repairs
- Tyres
Can I Claim Other Car Expenses with the Cents Per Kilometre Method?
No, you cannot claim other car expenses separately if you use the cents per kilometre method.
The rate covers all of these costs.
Do I Need to Keep Any Records When Using the Cents Per Kilometre Method?
You don’t need a detailed logbook for the first 5,000 kilometres, but it’s still smart to keep records of your business kilometres.
This could include:
- Odometer readings at the start and end of the financial year
- A diary or calendar noting work-related trips
- GPS or mapping app records
What Happens if the ATO Audits My Claim?
If the ATO audits your tax return, they may request evidence to support your claim.
Having records of your business kilometres can help you substantiate your claim.
Is There an Alternative to the Cents Per Kilometre Method?
Yes, if you travel more than 5,000 business kilometres or want to claim specific expenses, you can use the logbook method.
With this method, you keep a detailed record of all business trips, including dates, destinations, odometer readings, and purposes.
You can then claim actual expenses like fuel, repairs, and depreciation.