Tips for clients during WORK RELATED CAR EXPENSES crackdown

The ATO has warned that they will be paying close attention to claims for work-related car expenses this year and is reminding people to keep appropriate records.

It reports that over 3.75 million people made a work-related car expense claim in 2016–17, totalling around $8.8 billion and the ATO is looking to ensure that people are not over-claiming this year.

There are two ways to calculate a deduction for car expenses:

  • the cents per km method which limits claims for work-related travel up to 5,000 kms;
  • using a log book to determine the work-related percentage of actual expenses incurred.

Although claims of up to 5,000 kilometres using the cents per km method don’t require a log book, you still need to substantiate your claim. You need to have done the kilometres as part of your job and also be able to show how you calculated your claim.

You can keep a diary of places you have had to drive to for work and there are many apps available that can help make keeping records easier. Many apps are particularly useful as at tax time this data can be sent directly to us.

The ATO is also warning taxpayers to not double-dip.

We advise that car expense claims are only deductible if:

  • you have paid for it and not been reimbursed;
  • it is directly related to earning your income and not a private expense;
  • you have a record to prove it.”

The ATO has furthered warned that substantiation will be a key focus area this year and they have sophisticated systems and analytics to ensure inappropriate claiming doesn’t fly under the radar.

If you are unsure about how much you can claim, call us on 3822 7201.

For further information from the ATO, you can CLICK HERE