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_Torijj(Initiate)Initiate
30 July 2021

I recently purchased a branch new car which is a 4x4 utility ute that will be used to tow a trailer full of work equipment for 80% of the year. My new employer is asking whether i would like a car allowance or just a salary instead. I will be using a log book for 13 weeks of the financial year to make sure i have evidence of usage.

What i want to know is, If i receive a car allowance in my pay each week can i still claim the following deductions at tax time:

- Depretiation of vehcile

- Fuel

- Registration

- Insurance

- Services/Repairs

- Interest paid on car loan

Or am i not allowed to claim the above deductions? If I am not allowed to claim those deductions, would i be allowed too if i didnt receive a car allowance?

There is a lot of conflicting information out there and the ATO pages are so vague for employees, so if you could please clarify this it would be great!

Thanks!

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2,035 views
1 replies

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Most helpful reply

RichATO(Community Support)Community Support
2 Aug 2021

Hi @Torijj

You are right, this question can be confusing for many people.

There is a simple answer though for you. As your employer is offering to pay you a car allowance this is treated as taxable income and you can claim work-related car expenses against this income when you lodge your return.

Some employers only offer to reimburse car expenses using a fixed rate per km method. In these circumstances you can't also claim for work-related car expenses.

This question was also recently asked and very well answered on our Community platform. You may find the additional information provided in this car allowance post helpful too.

All replies

Most helpful reply

RichATO(Community Support)Community Support
2 Aug 2021

Hi @Torijj

You are right, this question can be confusing for many people.

There is a simple answer though for you. As your employer is offering to pay you a car allowance this is treated as taxable income and you can claim work-related car expenses against this income when you lodge your return.

Some employers only offer to reimburse car expenses using a fixed rate per km method. In these circumstances you can't also claim for work-related car expenses.

This question was also recently asked and very well answered on our Community platform. You may find the additional information provided in this car allowance post helpful too.

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Car Allowance & Depreciation as employee | ATO Community