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Claiming Motor Vehicle Expenses for Salary Job and Sole Trader

Newbie

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Replies 1

Hi,

I have a client who works full time for a carpentary company and has his own sole trading business as a landscaper. 

He travels to different worksites for his full time work during the week as a carpenter. On the weekend he does his landscaping business and also travels to various sites.

Can he claim either:

1) 2 x 5000km - 1 for the full time and 1 for the business, or

2)  2 x logbook - He says his car is practically used all for business as its a ute, or

3) 1 x 5000km and 1 x logbook - He can claim logbook for his sole trading business and 5000km for his full time work. However, will this mean that if he uses the ute for his full time work that it would count as 'private' for the purposes of trying to claim it in the business?

Thanks

Anthony

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Most helpful response

ATO Community Support

Replies 0

Hi @anthony_cez,

 

The short answer is Option 2 - two log books.

 

Option 1 (two maximum claims for the cents per kilometre method) is not allowable. This is because under the cents per kilometre method you're referring to as '5000km', a maximum of 5,000 kilometres per car is claimable. The only exception is where a vehicle was jointly used between owners for work purposes.

 

Option 3 (one maximum cents per kilometre method, one logbook method) would not be allowable. When calculating your deduction, you can change methods year to year, but you must choose one method per year and maintain that.

 

This leaves the only option of Option 2 - two log books.Keep in mind that the logbook method does not account for capital costs, such as:

  • the purchase price of the car
  • the principal on any money borrowed to buy it
  • any improvement costs.

 

Therefore these would need to be accounted for separately in the return.

 

The business portion and the employment portion will be declared separately on the return, and therefore won't impact one another (beyond the method of calculation).

1 REPLY 1

Most helpful response

ATO Community Support

Replies 0

Hi @anthony_cez,

 

The short answer is Option 2 - two log books.

 

Option 1 (two maximum claims for the cents per kilometre method) is not allowable. This is because under the cents per kilometre method you're referring to as '5000km', a maximum of 5,000 kilometres per car is claimable. The only exception is where a vehicle was jointly used between owners for work purposes.

 

Option 3 (one maximum cents per kilometre method, one logbook method) would not be allowable. When calculating your deduction, you can change methods year to year, but you must choose one method per year and maintain that.

 

This leaves the only option of Option 2 - two log books.Keep in mind that the logbook method does not account for capital costs, such as:

  • the purchase price of the car
  • the principal on any money borrowed to buy it
  • any improvement costs.

 

Therefore these would need to be accounted for separately in the return.

 

The business portion and the employment portion will be declared separately on the return, and therefore won't impact one another (beyond the method of calculation).