03/01/2024
Here are three simple methods for claiming car expenses as a small business owner:
1๏ธโฃ The "cents per km" method is easy - you simply multiply your work-related kms by the tax year rate, which allows claims up to 5,000 kms. This covers all ownership and operating costs. 85 cents per kilometre can be claimed using this method.
2๏ธโฃ For higher mileage, the "logbook method" may yield better results. By keeping a logbook for 12 weeks, you can determine your car's work-related usage percentage. Then claim that portion of expenses, excluding big ticket items like purchases. Fuel and maintenance receipts help substantiate claims.
Both methods provide tax deductions, but the logbook opens up claims on unlimited kms. Some extra record keeping is involved though.
3๏ธโฃ The actual cost method requires you to calculate the exact work-related costs of operating your vehicle. You also need to maintain a logbook to determine your vehicle's total kilometres and work-related usage percentage.
๐ ๐ ๐ Overall, the cents per km is very straightforward for lower mileage. For frequent work travel, the logbook method allows full cost recovery with clear trip logs. Proper documentation is important with both to satisfy tax authorities. With a little planning, you can benefit from car expense deductions. ๐ธ
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