If you claim a car or a Ute through your business, it’s important to note that there have been some recent changes that you need to be aware of which may require some homework on your behalf.
Cents Per Kilometre Method
The Cents per Kilometre method is used for vehicles that have some business use but the claim is limited to travel up to 5,000km per year.
This method allows you to claim a set rate of 68c per business kilometre travelled during the year. The important change to this method for businesses is the removal of a previous GST ruling which allowed claiming a percentage of the GST on the vehicle relative to the kilometres claimed. You are now required to show a reasonable estimate of business and total kilometres per tax period - the percentage of business use determines the GST claim for the period.
What this essentially means, is that for anyone with a motor vehicle used in business, a logbook is now the most appropriate way of maximising your claim for both GST and tax and as such, we suggest that you complete a logbook for all passenger motor vehicles in your business for 13 weeks of typical use during 20/21.
ATO Focus on Dual Cabs
The ATO has also flagged that there will be some focus on Dual Cab Utes as to private use over and above that which is just incidental to it’s work or business purpose, obviously due to their higher passenger carrying capacity. As such, we would strongly encourage all clients who have a dual cab to complete a logbook this year.
Completion of a Logbook
The ATO rules require you to record all of your business travel in a vehicle for a continuous 12 week period. From this, the business use percentage is calculated to claim expenses related to the vehicle, and GST in proportion to this percentage. This remains valid for 5 years unless there is a significant change in the pattern of use.
You can pick up a logbook from most newsagencies, use an app on your phone or use our template which can be found on our tax resources page.