ATO: What can tradies claim for vehicles?
10th September 2020
With tax time here, it’s time to start thinking about what you can and can’t claim in your tax return. The Australian Taxation Office (ATO) has shared these handy tips to help employee tradies tackle some common claims in their industry.
You can claim a deduction for the cost of using a car you own, lease or hire (under a hire-purchase arrangement) when you drive:
- between separate jobs on the same day
- to and from an alternate workplace for the same employer on the same day.
You can’t claim a deduction for the cost of normal trips between your home and work, even if you live a long way from your usual workplace or work outside normal business hours (for example weekend or early morning shifts).
In limited circumstances you can claim the cost of trips between home and work, where:
- your home was a base of employment (that is, you were required to start your work at home and travel to a workplace to continue your work for the same employer)
- you had shifting places of employment (that is, you regularly worked at more than one site each day before returning home).
- you were required to carry bulky tools or equipment for work – you can only claim these trips when all of the following conditions are met:
- The tools or equipment were essential for you to perform your employment duties and you didn’t carry them merely as a matter of choice.
- The tools or equipment were bulky – meaning that because of their size and weight it is awkward to transport and could only be transported conveniently by the use of a motor vehicle
- There was no secure storage for the items at the workplace.
If you claim car expenses, you must either:
- keep a valid logbook to determine the percentage of work-related use of your car along with evidence of your car expenses (logbook method)
- calculate your work-related kilometres and be able to show that those kilometres were work related (cents per kilometre method – this is only available for claims up to 5,000 km).
If your vehicle has a carrying capacity of one tonne or more, such as a ute, it is not considered to be a car. In these circumstances – for example, if you use a ute – you can claim the actual expenses that relate to your work travel, as a travel expense in your tax return. Examples of actual expenses include fuel, oil, insurance, repairs and servicing, car loan interest, registration and depreciation.
COVID-19 and car fringe benefits
Your fringe benefits tax (FBT) obligations relating to work cars may have changed as a result of COVID-19. Check out our factsheet at ato.gov.au/CarFringeBenefits. The ATO has recently released virtual introductory sessions to help you work out whether you are providing a car fringe benefit. Register for an Employer: Introduction to car fringe benefits session
Keep records of all your actual expenses as evidence of your claims, as well as records that show how you calculated your work travel as a percentage of your overall travel. While it is not a requirement to keep a logbook, it is the easiest way to show how you have calculated your work-related use of the vehicle. You cannot use the cents per kilometre method for these vehicles.
You can claim a deduction for the costs you incur on accommodation, meals and incidentals when you travel for work and sleep away from your home overnight in the course of performing your employment duties. Receiving an allowance from your employer does not automatically entitle you to a deduction. In all cases you need to be able to show you were away overnight, you spent the money, the travel was directly related to earning your income and how you calculated your claim.
Help and support
Remember if you want to claim a deduction for a work-related expense:
- You must have spent the money yourself and weren’t reimbursed
- It must be directly related to earning your income
- You must have a record to prove it.
Did you know?
The myDeductions tool in the ATO app can help make keeping records easier and is useful for people who use their car for work purposes. At tax time the data from the app can be sent directly to a tax agent or uploaded into myTax.
Disclaimer: The information above is of a general nature only and does not consider your individual circumstances. MEA does not provide financial or tax advice. Always consult with your accountant.