Can I Claim My Car Loan On Tax?

//Can I Claim My Car Loan On Tax?

When it comes to determining whether you are eligible for tax benefits on your car loan, it comes down to one crucial distinction – do you use your car for personal or business use? While there are no tax deductibles for personal use – such as commuting between home and work – Australian companies and professionals can claim all kinds of car-related tax benefits, from deduction claims to logbook expenses.

Work-related or business travel expenses that can be claimed include any deliveries you have to make, trips to meetings or to pick up supplies, as well as travel between one workplace and another.

How to calculate a business vehicle tax deduction

Small Australian businesses may claim tax deductions for assets that are valued under $20,000. If the car you purchase cost less than $20,000 and is itemised as a business purchase, you may claim the full amount in your tax return. However, how regularly the vehicle is used for business purposes will impact the claim.

The interest payable on the financing of commercial vehicles is a deductible expense. You can only claim a deduction for the proportion of time that the car is used for commercial purposes. Generally, two methods are used to determine a business vehicle tax deduction. The method of choice would be the one that enables you to claim the maximum amount.

  1. Use actual mileage

With this method, a business can claim expenses up to a maximum of 5,000km a year. This claim can be made by multiplying the total distance of kilometers traveled by the given rate of 66 cents for every kilometer. To claim deductions, you have to maintain logbook records of every business-related trip.

  1. Logbook method

With this method, you will have to keep track of your expenses over a period of 12 weeks. In addition to this, every five years you will have to repeat the logbook exercise to determine if there have been any changes in how the vehicle is used. Expenses such as business use percentage, vehicle purchase price, loan repayments, maintenance costs and odometer readings need to be recorded.

You can also claim tax claim benefits on chattel mortgage car loans provided you use your vehicle for business purposes for more than 50% of the time. If you’re looking for a car loan to match your financial profile, or require any tax advice relating to your vehicle, get in touch with a Simply Finance broker today.

2018-08-21T05:31:45+00:00 August 2nd, 2018|Car Loan|Comments Off on Can I Claim My Car Loan On Tax?