Claiming Car Expenses - 1/3 of Actual Expenses Method


(last updated 27/03/2014)

Related Posts:
This method of claiming work related car expenses allows you to claim 1/3 of your ACTUAL car expenses for the year or period.

For details and a checklist on other methods of claiming car expenses see these posts:
It is a handy method to use when a log book has not been kept and you travel more than 5000 km. This method requires you to travel more than 5000 km in a year - or equivalent to a year if apportioned.

As with the log book method, you must have written evidence for all your car expenses except fuel and oil costs. There are two ways to work out your fuel and oil costs:
  • use your fuel and oil receipts, if you have them
  • keep odometer records and make a reasonable estimate based on those records.
Odometer records need to show the odometer readings of the car at the start and end of the period that you owned or leased the car during 2007–08. They should also show the car’s engine capacity, make, model and registration number. You may also need to be able to show how you worked out your business kilometres and any estimate of fuel cost you made
Example of estimating fuel claim where fuel consumption is estimated at 10 litres per 100 km:
1. 25,000 kilometres travelled over the year divided by 100 x 10 litres = 2,500 litres, then
2. 2,500 litres x $1.30 per litre = $3,250.

Example of calculating your car expenses:


Fuel
3250
Rego and insurance
1055
Repairs and Maintenance
650
Tyres
480
Interest
1200
Depreciation (20000x.25)
5000
Total
11635


1/3 of actual expenses
3878


If the car was used for the whole year the allowable deduction would be $3878.
If the car was used for six months the reduced claim would be $3878 x 6/12 ==> $1939
* Note that depreciation is calculated on the reduced balance after previous year(s) depreciation (deemed or actual).

As you can see from this example, if the car expenses is relatively small, the rate per km method may produce a similar result (or better if only part year usage), with little record keeping and substantiation. For that reason we rarely use this method of claiming car expenses.

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.

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