Earn
6 of the biggest car-related tax mistakes Australians make
Forty per cent of all work-related tax deductions in Australia relate to driving and cars, which means that plenty of mistakes are also made. Here’s a list of what not to do when making a car-related claim this tax time.
6 of the biggest car-related tax mistakes Australians make
Forty per cent of all work-related tax deductions in Australia relate to driving and cars, which means that plenty of mistakes are also made. Here’s a list of what not to do when making a car-related claim this tax time.
Peer-to-peer car sharing platform Car Next Door CEO said many car owners claim too little when it comes to their car-related expenses at tax time, as opposed to too much.
He highlighted that Australians are often entitled to claim car-related expenses for using their own car to perform a number of work duties.
These may include: carrying tools or other equipment needed for your job, travelling from home to an alternative workplace (like a client’s office) then back to your main workplace or home, travel to meetings, conferences or events as required by your employer, and travelling between two separate workplaces where you are employed and delivering or picking up items as required by your employer.
But there are a number of items that are not allowable tax deductions, while there are others that people don’t realise they can claim on. Here are six of the biggest mistakes Australians make when they are making car-related deductions, according to Will Davies:
- Claiming normal travel to and from work
Even if you use your commute to do a small work-related task, like picking up mail, this isn’t claimable.
The same is unfortunately true when you’ve done overtime, or are unable to catch public transport.
- Claiming for carrying equipment not required by your employer
While you can claim the carrying of tools or other equipment needed for your job, if you cannot prove this is required by your employer or that there’s no safe place to store your equipment at work, then it can’t be claimed.
- Claiming expenses associated with a company car or car purchased through a novated lease
Mr Davies has warned against attempting to “double dip” – you can’t claim expenses that your employer has already paid for, and this includes salary sacrificing arrangements.
- Claiming expenses without records to back them up
One of the most common mistakes that car owners make, according to the CEO, is claiming car costs using the ATO’s cents-per-kilometre method without the records to back this up.
While you can claim up to 5,000 km a year at 68 cents in the 2020 tax year, this is not a “free pass”, he conceded – you must have documentation.
- Forgetting to claim depreciation
If you use your car for work or rent it out, ask your accountant about how you can calculate depreciation – it may add thousands to your allowable deductions!
- Not claiming all allowable expenses, if you rent your car out
For anyone who does rent out their car, the money earned through this is considered taxable income and must be declared on a return.
But expenses can be claimed for the portion of your car costs that do relate to the rental activity, or a simple 68 cents for every kilometre your car is used.
Did you enjoy this article? You may also be interested in:
- Can I claim my loose change charitable donation?
- How to make 2020 tax time even easier
- Working from home? Filing a 2019-20 tax return just got easier
RELATED ARTICLES
About the author
About the author
Tax refund
The ATO will be focusing on these four issues at tax time
The tax office has indicated it will be scrutinising areas where taxpayers are known to make mistakes. Read more
Tax refund
More than half of Aussies get stressed at tax time, survey finds
Many taxpayers feel that they may be missing out on deductions in their tax returns. Read more
Tax refund
Engage or face firmer action, ATO warns taxpayers with unpaid debts
The tax office is offering support and assistance to those with overdue debts. Read more
Tax refund
How to prepare for your tax return
While the end of the financial year is still a couple of months away, you can take action now to help maximise your tax return. Read more
Tax refund
What issues will be on the ATO’s radar this year?
H&R Block has outlined two main areas that the tax office is expected to focus on. Read more
Tax refund
How does the expanded low and middle income tax offset work?
Millions of taxpayers will receive hundreds of dollars more in their tax return this year. Read more
Tax refund
Why 90% of taxpayers could face a higher tax bill next financial year
A tax offset for over 10 million Aussies may not be extended in next month’s budget. Read more
Tax refund
PM ponders extension of low and middle income tax offset
Scott Morrison has hinted that a popular tax-saving measure may return in 2022. Read more
Tax refund
The ATO will be focusing on these four issues at tax time
The tax office has indicated it will be scrutinising areas where taxpayers are known to make mistakes. Read more
Tax refund
More than half of Aussies get stressed at tax time, survey finds
Many taxpayers feel that they may be missing out on deductions in their tax returns. Read more
Tax refund
Engage or face firmer action, ATO warns taxpayers with unpaid debts
The tax office is offering support and assistance to those with overdue debts. Read more
Tax refund
How to prepare for your tax return
While the end of the financial year is still a couple of months away, you can take action now to help maximise your tax return. Read more
Tax refund
What issues will be on the ATO’s radar this year?
H&R Block has outlined two main areas that the tax office is expected to focus on. Read more
Tax refund
How does the expanded low and middle income tax offset work?
Millions of taxpayers will receive hundreds of dollars more in their tax return this year. Read more
Tax refund
Why 90% of taxpayers could face a higher tax bill next financial year
A tax offset for over 10 million Aussies may not be extended in next month’s budget. Read more
Tax refund
PM ponders extension of low and middle income tax offset
Scott Morrison has hinted that a popular tax-saving measure may return in 2022. Read more
