Claiming Car Expenses - 12% of Original Value Method

(last updated 27/03/2014)

Related Posts:
After the Set Rate per Kilometre and log book method of claiming car expenses, this is the next best method. It is a handy method where a client has a relatively high cost vehicle.

For details and a checklist on other methods of claiming car expenses see these posts:
You can use this method if you used your car to travel more than 5,000 business kilometres in the financial year. This method is also available if you would have used your car to travel more than 5,000 business kilometres had you used it for the whole of the financial year.

You do not need written evidence to use this method but you may need to be able to show how you worked out your business kilometres.

If you bought the car, you can claim 12% of the cost. If you leased the car, you can claim 12% of its market value at the time that you first leased it. The maximum deduction you can claim is 12% of the luxury car limit in the year in which you first used or leased the car. The luxury car limits for the past several years are shown in the table below.

      Car limits
      2012–13
      $57,466
      2011–12
      $57,466
      2010–11
      $57,466
      2009–10
      $57,180
      2008–09
      $57,180
      2007–08
      $57,123

Example of Calculation:

Cost of vehicle when purchase: $45000
Work related travel: 6000km
Deduction to claim in tax return: $45000 x .12 = $5400
This is a much better result than using the rate per kilometre method where no records have been kept.

FREE fact sheet on claiming car expenses ==> Claiming a Deduction for Car Expenses.

If you receive an allowance from your employer for car expenses it must be included as assessable income. See this post for a checklist of eTax and Assessable Income.

E-tax Return

See these posts with tips, calculators and checklists to help you prepare your eTax Return (and get a better refund) with less hassle:
For help with your eTax return see our eTax Return Checklist.

Web Based Tax Return App:

A benefit of using eZtax, our web based tax return app, is we have the genuine online tools, knowledge and experience to get the best tax refund for our clients, making it easy to complete your annual tax return online.

Our Web Based Tax Return App will step you through all the necessary questions to increase your  tax refund and take into account all relevant tax deductions and tax offsets. Try it now. Its FREE to get started!

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