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How to claim motor vehicle deductions.

Do you ever need to use your car for work? A common questions we get asked is can someone claim travel to and from the office from home. Generally the answer is a NO.

Examples of when you can claim motor vehicle deductions include:

  1. Travelling between jobs
  2. Travelling from the office to alternative workplace (eg a client)
  3. Travelling to a client if you were working from home
  4. Attending conferences or meetings
  5. If you need to carry bulky tools or equipment (not a laptop or tablet but say a ladder or lawn mower)

Once you establish that you can claim motor vehicle deductions, there are different methods you can use depending on the number of kilometres you travel and how careful you are with your record-keeping:

  1. Log book method – log book needs to be kept for 12 weeks – source documents need to be kept
  2. 1/3 of actual cost – if there are more than 5,000 work related km’s travelled during the year – need to keep source documents
  3. 12% of original value – if there are more than 5,000 work related km’s travelled during the year
  4. Cents per km method – if there are less than 5,000 work related km’s travelled during the year – based on engine size

Generally the log book is the most inconvenient method for someone to follow, but it usually gives you the most accurate indication of your work hours.

This Tax Tip Tuesday brought to you with love by Nudge Accounting.