Claiming a Deduction For Car Expenses Relating to Award Transport Payments

(last updated26/06/2013)

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    What are award transport payments?

    Award transport payments are allowances covering either transport expenses or car expense reimbursements that are paid under an industrial law or award that was in force on 29 October 1986. The Award Transport rate changes each year. You can contact your union to find out the rate that applies for your industry.

    Claiming a deduction limited to the Award Transport Payment

    Award transport payments are assessable income which must be included as Assessable Income - see our post on what is Assessable Income. If you have incurred car expenses covered by these payments, you claim your deduction at either item D1 or item D2 as follows:
    • If your claim for work-related transport or car expenses is no more than the award amount actually received, make the claim at item D2 on your tax return. You do not need written evidence for this claim.
    • If you also have a claim for any additional kilometres not covered by the award transport payment, you can make the claim at item D1 on your tax return but you can only use the ‘logbook’ method (you will need written evidence) or the ‘cents per kilometre’ method.
    • If you are claiming more than the award amount for transport expenses, make the claim at item D2 (you will need written evidence for the whole of the claim).
    Remember, kilometres that are covered by the award transport payment and claimed at item D2 on your tax return are not counted as business kilometres under either the ‘cents per kilometre’ or ‘logbook’ method but they are counted as part of the total kilometres travelled for the ‘logbook’ method. If you do not know how many business kilometres relate to your award transport payment, you can make a reasonable estimate.

    Claiming a deduction in Excess of the Award Transport Payment

    Your 4entitlemnt to claiming car expenses is not limited or capped to the amount of the Award Transport payment actually received. It is only one method of claiming car expenses 

    Alternatively, you may choose not to limit any part of your claim for work-related car expenses to the award amount. If this is the case, make your claim at item D1 using any of the 4 ways of claiming car expenses on your tax return (and do not claim car expenses covered by your award transport payment at item D2). Treat any work-related kilometres covered by the award transport payment as business kilometres. You will need to provide the written evidence required by the particular method you select.

    The example below explains the different ways you can claim when you receive an award transport payment.

    Example:

    Emma travelled 22,000 kilometres in total during 2008–09. Half of these were work related. She received an award transport payment of $2,000 which, under her award, covered travel of 5,000 work-related kilometres. This left her with 6,000 business kilometres not covered by the payment. The ‘29 October 1986’ award transport payment was $1,400.

    Emma has to show the $2,000 at item 2 on her tax return. She can claim her car expenses in one of the following ways:
    • She can claim $1,400 at item D2
    • She can claim $1,400 at item D2 and then use 5,000 of her additional 6,000 business kilometres towards a claim for total car expenses at item D1 using the ‘cents per kilometre’ method.
    • If she has written evidence of her expenses, she can claim $1,400 at item D2 and then use all the outstanding 6,000 business kilometres towards a claim for total car expenses using the ‘logbook’ method. She divides her 6,000 business kilometres by her 22,000 total kilometres to work out her business use percentage:
                  6,000 / 22,000 x 100 = 27%
    • If she has written evidence of her expenses, she can treat the kilometres covered by the award transport payment as business kilometres, and claim them as work related car expenses at item D1. This gives her a total of 11,000 business kilometres towards a claim for total car expenses using the ‘logbook’ method. She divides her 11,000 business kilometres by her 22,000 total kilometres to work out her business use percentage:
                  11,000 / 22,000 X 100  = 50%

    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:
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