Hello. I am wondering whether I can claim 85c/km on tax for this financial year using the c/km method?
My employer does not reimburse for actual expenses - and provides me an allowance of 85c/km when I log my km travelled. Last year this appeared on my income statement as taxable income.
Am I allowed to claim 85c/km on my tax return this year?
Hiya @south474 ๐
The ATO requires employers who pay c/km allowances to report it as income, as it is a "payment subject to withholding", even if you meet the conditions set by the ATO for your employer to vary the withholding to nil.
That's the employer requirement to tax and report c/km as income.
To match that, you must claim a deduction for transport expenses, as per the ATO guidance, else any reduction of tax made by your employer won't have an off-setting deduction claim and you may be required to pay the tax that wasn't withheld on the c/km allowance to the ATO.
That's how it's designed to work: employer pays, if conditions met, no tax, reports as income, matched against deduction claim from taxpayer.
Deanne
Hiya @south474 ๐
The ATO requires employers who pay c/km allowances to report it as income, as it is a "payment subject to withholding", even if you meet the conditions set by the ATO for your employer to vary the withholding to nil.
That's the employer requirement to tax and report c/km as income.
To match that, you must claim a deduction for transport expenses, as per the ATO guidance, else any reduction of tax made by your employer won't have an off-setting deduction claim and you may be required to pay the tax that wasn't withheld on the c/km allowance to the ATO.
That's how it's designed to work: employer pays, if conditions met, no tax, reports as income, matched against deduction claim from taxpayer.
Deanne
Hi Deanne :) Thanks so much for your answer.
That's great news! Is the story the same if my employer pays me a bulk figure (say $10,000/yr) as a car allowance? I just need to keep track of my work based km and then claim the amount of km's x the ATOs c/km rate?
Yes, @south474, as per the detailed ATO guidance about claiming deductions for car expenses incurred for business purposes. Those "flat" car allowances are taxed as salary and wages, but claiming deductions for work expenses remains the same ๐
Deanne
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