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Motor Vehicle expenses

Newbie

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Hi,

 

I travel 25000km per year in my own car.

I do approx. 9000km per year for an employer (TFN)

I also do approx. 5000km per year as a sole trader (ABN)

 

  1. Can I claim motor vehicle expenses (either log book or KM method) on both my TFN and ABN?
  2. If I enter into a novated lease agreement with my Employer and can no longer claim expenses on my TFN, will I still be able to claim sole trader kms travelled using the lease car against my ABN?

Thanks

 

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Accepted Solutions

Most helpful response

ATO Community Support

Replies 0

Hi @Adri1,

 

I've taken a look into these questions for you.


1. Can I claim motor vehicle expenses (either log book or KM method) on both my TFN and ABN?

 

In short, yes. You can claim tax deductions for expenses you incur (and aren't re-imbursed for) both as an employee and in running your own business. However, you need to consider which calculation method is more appropriate given the situation, as you must pick one method and apply that to both circumstances if you're using one car. This has been discussed in detail under the forum post 'Claiming Motor Vehicle Expenses for Salary Job and Sole Trader'. If you have two cars or more, then you can choose a different method to calculate the expenses per car.

 

2. If I enter into a novated lease agreement with my Employer and can no longer claim expenses on my TFN, will I still be able to claim sole trader kms travelled using the lease car against my ABN?

Generally speaking, under Novated lease agreements the employer either owns or leases the vehicle and makes it available for the employee to use in order for the employer to claim tax benefits. If the employee doesn't own or lease the vehicle themselves, then they aren't entitled to claim a deduction using the cents per km or log book. However, it may be possible to claim actual costs incurred related to work-use (such as petrol) when using someone else's vehicle. Additionally, if you can demonstrate that there's a private arrangement where you are the owner or lessee (even if you aren't the registered owner), then you may be able to calculate your expenses with the logbook or cents per km method.

 

There are a number of good comments posted under 'Novated Lease deduction' as well as the official section of the Income Tax Assessment Act 1936 section 51AF just to provide more insight. Our Caiming a tax deduction for motor vehicle expenses webpage is a great place to find some important resources too.

 

I hope this helps Smiley Happy

 

RachATO

1 REPLY 1

Most helpful response

ATO Community Support

Replies 0

Hi @Adri1,

 

I've taken a look into these questions for you.


1. Can I claim motor vehicle expenses (either log book or KM method) on both my TFN and ABN?

 

In short, yes. You can claim tax deductions for expenses you incur (and aren't re-imbursed for) both as an employee and in running your own business. However, you need to consider which calculation method is more appropriate given the situation, as you must pick one method and apply that to both circumstances if you're using one car. This has been discussed in detail under the forum post 'Claiming Motor Vehicle Expenses for Salary Job and Sole Trader'. If you have two cars or more, then you can choose a different method to calculate the expenses per car.

 

2. If I enter into a novated lease agreement with my Employer and can no longer claim expenses on my TFN, will I still be able to claim sole trader kms travelled using the lease car against my ABN?

Generally speaking, under Novated lease agreements the employer either owns or leases the vehicle and makes it available for the employee to use in order for the employer to claim tax benefits. If the employee doesn't own or lease the vehicle themselves, then they aren't entitled to claim a deduction using the cents per km or log book. However, it may be possible to claim actual costs incurred related to work-use (such as petrol) when using someone else's vehicle. Additionally, if you can demonstrate that there's a private arrangement where you are the owner or lessee (even if you aren't the registered owner), then you may be able to calculate your expenses with the logbook or cents per km method.

 

There are a number of good comments posted under 'Novated Lease deduction' as well as the official section of the Income Tax Assessment Act 1936 section 51AF just to provide more insight. Our Caiming a tax deduction for motor vehicle expenses webpage is a great place to find some important resources too.

 

I hope this helps Smiley Happy

 

RachATO