Most helpful replyATO Certified Response
Author: RachATO(Community Support)Community Support ATO Certified Response14 May 2021
Hi @kay_f21,
We would like to know more information in terms of whether you're operating a business as a sole trader, or whether you'll be working as an employee? And also when the car was purchased?
If you're running a business and the car was bought after Dec 31 2020, then you may be eligible for temporary full expensing for the financial year that you first use the vehicle for work-related purposes. If the vehicle was purchased between 12 March 2020- 31 December 2020, then the instant asset write off (IAWO) may apply.
You'll need to take a look through the links I provide further down to determine if you meet either of their criteria's.
If you're an employee however, there are three rules in order to claim work-related expenses:
• you must have spent the money yourself and weren't reimbursed • it must directly relate to earning your income • you must have a record to prove it.
The second point is quite significant, as you can only claim work-related expenses if the useage relates to earning income in your current role. Costs incurred prior to engaging in a new employment role are not deductible, even if these expenses are per-requisites to gaining employment.
Additionally, if you receive reimbursements through your employer for vehicle related expenses for using your private car, you wouldn't be able to claim for costs if you weren't technically out of pocket for them.
So, in terms of an employee situation in this scenario, you'd likely be able to claim travel and running costs using the cents per kilometre method (for a maximum claim of 5,000km per year), or the Logbook method (you can claim based on the percentage of business use expenses for the car, including running costs and decline in value).
If you're still uncertain, you could reach out to our Early Engagement team for assistance as well.
Temporary full expensing
Instant asset write-off
Deductions you can claim
myTax 2020 Work-related car expenses
Early engagement
RachATO
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