Instant Asset Write - Off for Small Business

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The Instant Asset Write-Off Scheme will be extended to 30 June 2020 for assets purchased under $25,000.

The Instant Asset Write-Off affects small businesses with a turnover of up to $10 million a year.

It allows business owners to immediately deduct assets costing up to $25,000 which can then be claimed for tax return in that income year. The Prime Minister’s announcement on 29 January stated that “businesses who go out and invest today, whether it’s a vehicle, whether it’s a piece of plant or equipment, all of it, up to $25,000, immediate write down.” However, there are certain assets that are excluded from the scheme so it is best to check with your accountant or financial advisor.

It is important to remember that the Instant Asset Write-Off Scheme reduces the tax your business has to pay, it is not a rebate. Your cash flow will still have to be sufficient enough to support the purchases.

With the ATO reporting that the average claimed amounts were at $11,000 in 2016-2017, there are concerns that the scheme is underutilised. Fewer than 350,000 small businesses have taken advantage of the scheme in the 2016-2017 year.

There is no guarantee that the Federal government will extend this scheme beyond 30 June 2020.

Single Touch Payroll

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Single Touch Payroll is a change to the way employers report their employees' tax and super information to ATO.

Using payroll or accounting software that offers STP, employers send their employees' tax and super information to ATO each time they run their payroll and pay their employees. The information is sent to ATO either directly from the software, or through a third party – such as a sending service provider.

Software providers can tell you more about how they offer STP reporting.

Employers with 20 or more employees

STP reporting started gradually on 1 July 2018 for substantial employers (those with 20 or more employees).

If you have not started reporting through STP, we have information to help you get ready. If you need more time, you can apply for a deferral.

Find out if your software is STP-ready by talking to your software provider. Your tax professional can also help.

Employers with 19 or less employees

Legislation to extend Single Touch Payroll to include employers with 19 or less employees is currently before parliament.

For now, you can choose to report through STP. Talk to your software provider to find out what you need to do to update your software and start reporting.

ATO won't force employers with 19 or less employees to purchase payroll software if they don’t currently use it. Different STP reporting options will be available by 1 July 2019 to help smaller employers.

Single Touch Payroll authorisations

The ATO has allowed clients to authorise their registered agent to act on their behalf for Single Touch Payroll (STP).

On 1 July 2018, the Australian Government introduced STP for employers with 20 or

more employees. The new scheme requires employers to report payment activities each

time employees are paid. The STP engagement authority allows employers to provide the

Commissioner of Taxation with the relevant form once a year instead of at every pay event by

using a registered agent.

STP engagement authority

A registered agent that reports through STP for an employer can get written authorisation to make this declaration through an annual agreement. This authorisation allows the registered agent to make the relevant declaration to the Commissioner when they lodge an STP at each pay event. Both parties should have a copy for their records although there is no need to provide a copy to the ATO.

The agreement should include the following terms:

•An outline of the responsibilities of both parties

•Agreed terms of the employer’s collation of payroll

•Their process for calculating and paying their employees

•Taxation and superannuation obligations

Employer’s eligibility

To be eligible for the STP engagement authority the employer must not:

•Have any overdue activity statement lodgements

•Have any outstanding debts, unless they are covered by a payment arrangement or

subject to review

•Currently be or have been the subject of the ATO compliance activity for PAYG withholding in the last two years

Exclusions

The STP engagement authority does not apply to other approved forms or the finalisation declaration. A registered agent must still get a signed declaration in writing from an employer before making the finalisation declaration on behalf of the employer at the end of the financial year.

Could your Business Survive Without you?

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Could your business survive without you? Your business must be independent of any one individual if you want your business to thrive in the marketplace on a long-term basis.

The most effective way you can grow your business is by removing yourself from the daily operations and focusing your time on developing strategies to elevate and move your brand forward. However, you cannot step away from running your business until you have strong systems in place, a dependable and knowledgeable team, and a stable customer base.

To help you develop a business that can run on its own, consider the following:

Test your business

The best way to test how well your business will perform without you is to go on a holiday. Ensure you are unreachable during the entire period. In this way, you can come back and assess what went wrong or where your issues lie, for instance, you may find your staff are not comfortable calling the shots if they are used to being micromanaged.

Build strong systems

Putting strong systems in place is the only way you can remove yourself from the daily operations involved in running your business. You must establish clear requirements for all business activities, including how to manage your social media and content calendar through to the processes used for handling customer complaints. By having clear guidelines in place for every aspect of your business, you will no longer need to be there to save the day.

Become replaceable

When you reduce your responsibilities, you must have a reliable and qualified team who can run your business efficiently in your stead. There must be team members employed who are capable of speaking to clients or suppliers and have the relevant industry knowledge to make important decisions on behalf of your business. You need to ensure there are also effective training protocols set up so that every employee understands the business policies and procedures, and what is required in their individual roles.

Perks of a stable customer base

Having a steady customer base provides a reliable and regular source of financial security to take time out to strategise your business’ future or tweak any issues in your branding image. For instance, you may want to put your time and effort into perfecting or redeveloping your service or product to attract a broader target market. Stepping away also allows you the freedom to take time away from your business altogether.

Hobby Or Business?

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It may seem fairly obvious whether a person is in business or not, but the distinction can be important for other reasons.

It's important to establish, from a tax point of view, whether your “activity” is more than a hobby, and is in fact a bone fide business. Hobbies are activities which lack a profit motive, amongst other factors, and just as you don’t have to pay tax on hobby income you cannot claim hobby expenses as losses against other income. However, some hobbies can display certain characteristics of a business at some point, which may give rise to taxable income.

It is an ongoing issue, from the ATO’s point of view. “A hobby is a spare-time activity or pastime pursued for pleasure or recreation,” the ATO said in a recent document on the topic. “Unlike a hobby, a business is run with the intention of making a profit and has basic reporting requirements, such as declaring income and claiming expenses.”

Some years ago, a court case involving turtle was initiated by the ATO. Breeding and selling turtles was seen as running a business, with substantial tax and penalties charged on three years of undeclared profits.  The turtle enthusiast claimed to be simply funding a personal hobby, but there was found to be significant financial purpose and viability in his online sales. 

It's worth bearing in mind - In this era of e-commerce the ATO has become more sophisticated in obtaining data for their audits.

Of course, if a LOT of money being made, the ATO are more likely to look at it as a business. However, when determining if a person is conducting a business or a hobby the ATO considers the common-law business indicators. 

There is no set gross money limit that indicates a business.

It is therefore important to know the difference between a hobby and a business. To help, the ATO has come up with a set of guidelines. It says that there is no single rule that determines if you're in business. From photography, scrap-booking, cooking or even horseback riding, each of these hobbies can turn into a business. With that in mind, when it comes time to lodge your tax return, your hobby could possibly be your business. Taxpayers get confused about whether or not they should be reporting their hobby as a business. Of course, you want to avoid being penalised if you’re not declaring income to the ATO, right?
 

a hobby is an activity that you engage in for personal enjoyment. This means you are doing your hobby for your satisfaction. Generally, there are some factors that you can think about to ensure you’re actually a hobby. Follow these guidelines below:

  • Your do not have a set schedule for your hobby.
  • Gifting or selling your items for the cost of your materials.
  • You do not intend to make a profit.
  • You do not make a profit.
  • You’re simply involved in your hobby for recreation.

Although taxpayers may have expensive hobbies, the ATO doesn’t specify an income limit as to when you’re considered a business. Luckily, you won’t need to declare any income you earn from your hobby to the ATO. However, if you experienced any losses from your hobby, you can’t report that on your tax return.

 

Signs of a Business

Now if you’re selling your lavish paintings to people who are interested in art and you’re marking up each art piece to make a profit, good news is, you’re a business. Here are some indicators that you have a business:

  • You regularly make a profit.
  • An item’s price is worth more to guarantee a profit.
  • Your schedule is consistent in order carry out your activities.
  • You plan your activities in a business like manner.
  • You are paying for advertising or any commercial outlet of your activity.

As you can see, the main difference between a hobby and a business would be your intention to make a profit.

The following are indicators that you may be in business:

  1. You've made a decision to start a business and have done something about it, such as registered a business name or got an ABN.
  2. You intend to make a profit or genuinely believe you'll make a profit from the activity, even if you're unlikely to do so in the short term.
  3. You repeat similar types of activities.
  4. The size or scale of your activity is consistent with other businesses in your industry.
  5. Your activity is planned, organised and carried out in a businesslike manner. This may include:
  • keeping business records and account books
  • having a separate business bank account
  • operating from business premises
  • having licenses or qualifications
  • having a registered business name.

The same principles apply broadly to all manner of activities and lack of profits does not necessarily mean someone is not in business. However, it is acknowledged that arts businesses have different characteristics to other businesses  - they may sustain lower income and losses for a longer period while building reputation and creating a niche market. 

To also help, the ATO has devised a “Hobby or business?” decision tool (access this here). Note that it is hosted on the business.gov.au site, and is not a tax-specific tool as it mentions other criteria such as consumer law.

If you do determine that your activities are indeed a hobby, the ATO will generally not expect that you to have any tax reporting obligations. You will not be entitled to an ABN. The ATO does advise, however, that taxpayers should check on a regular basis to make sure activities still qualify.

On a related note, the ATO say even if your activity is a hobby, but you supply goods or services to businesses, they may request an ABN when they pay you. “As you don’t need an ABN,” it says, “you can use the statement by supplier” (hobby form) to avoid the business withholding an amount from their payment to you for not having an ABN.”

Attention Business Starters!

If you realise that you’re indeed a business, you need to determine your business structure. Overall, this means you need to identify with a business type such as a Sole trader, Partnership, Company or Trust.

  1. Sole Trader: An individual owns a business and reports this on their personal income tax return.
  2. Partnership: Two or more people start a business to share profits and losses. You must lodge a separate partnership income tax return.
  3. Trust: A third party has legal control of a business and runs the business to benefit someone else. You must lodge separate trust income tax returns.
  4. Company: Legally, a company is separate from its shareholders. You must lodge a separate company income tax return.

Additionally, common registrations in order to be a business are Tax File Numbers (TFN), Australian Business Numbers (ABN), Goods and Services Taxes, Pay As You Go (PAYG) withholdings, Fringe Benefits Taxes (FBT), and Fuel Tax Credits. As a reminder, your business structure helps you to find out your tax obligations. Find out which business structure you are by taking a look at the ATO’s guidelines.

Is your hobby online selling?

Online selling might be tricky. If you sell items online as a hobby, this means you are carrying out your activity for your own personal interest without the goal of making a profit.

For example, Amanda loves to shop. She constantly buys clothing from blouses to jeans to shoes. However, as seasons and years change trends age and go out of fashion. Amanda decides to list her clothes on Amazon for individual sale. She sells some clothing for more or less than the original purchase price. She charges buyers for the shipping costs and receives $1,075.

Amanda’s online-selling is a hobby. She did not improve her clothing to increase it’s value, she didn’t sell repeatedly, she didn’t pay the online website to advertise, and mostly sells clothing for less than the purchase price. Lastly, she does not have the intention of selling clothing online to make consistent income.

Online Selling as a Business.

To make matters simple, if you set up an online website to advertise and sell the products created from your hobby to make a regular sale, then it is no longer a hobby. It becomes a business and your income will be subject to tax.

For instance, Sharon has a full-time job as a kindergarten teacher at New Hill Public School. Her hobby is collecting old antiques and repairing them during her spare time. Her friend; Bill, offers her $300 for an antique vase. Then, Sharon starts to take an interest in making a business out of this activity. Due to this, Sharon takes pictures and shares them on social media like Facebook and Twitter. The total profit was $25,000 for the year. This is considered taxable because her intention was to make a profit. In the end, she did sell her items for a profit since she restored these antiques, made repeated sales, and because she uses a specific online website to advertise even though she didn’t specifically pay for advertising.

What happens if I don’t declare my income?

Your business income is labeled as “assessable income”, which means you are required to declare it to the ATO and it is subject to tax. If you do not declare your income, you can possibly trigger the ATO to take a closer look at your entire tax situation. Steer clear of this by reporting all of your business income to avoid possible ATO audits. Fortunately, your earnings from your hobby is not assessable income, so you can exclude this on your tax return.

Year-end mistakes 

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Year-end mistakes

Businesses must be aware of their responsibilities at the end of the financial year. Careless mistakes in tax returns or simply being unorganised can see business owners lose out on significant tax savings, as well as finding themselves liable for penalties. Avoid the following mistakes:

Paying superannuation
Super is payable 28 days after the end of the quarter. It is important to remember that to claim a deduction for the super contribution the employer must have made the contribution before June 30. Not paying super by the due date will also lead to a penalty imposed by the ATO.

Lodging group certificates
A common mistake made by business owners is issuing group certificates late and incorrectly reporting the figures. Employers are required to issue their payment summaries to their employees by 14 July and to the ATO by 14 August.

ATO benchmarking
Small business benchmarks are financial ratios that have been developed by the ATO to help compare the performance of similar businesses in an industry. Businesses should take a look at their financials and review their management accounts before 30 June. They should be focusing on any unusual large amounts that have been reported as this could be an indicator of an accounting error or a more serious problem.
 

10 Reasons You Should Hire a Bookkeeper for Your Startup

A professional bookkeeper actually saves you money through less human error and the bills that get paid on time.

A professional bookkeeper actually saves you money through less human error and the bills that get paid on time.

Consider a scenario where your startup is on its way from idea to formal business. There are many, many things to think about and consider.

And one of them may just include that all-important decision of when to bring in outside experts to assist you with some of the operational functions that go into running a business.

Those functions almost certainly include the financial aspect of your business. While you may not need -- or want -- an accountant, you could at least consider a bookkeeper to help with the various financial aspects. Your only other alternative is to become bookkeeper yourself so that you understand every aspect of your business! And that's just not realistic.

So, returning to the bookkeeper option, here are 10 reasons why you should definitely consider hiring one:

1. Keep your focus on core business needs. 

A startup needs the attention of its founder, including his or her attention to growing the idea into a viable product or service. That means that, as that founder, your time should be devoted to strategy, marketing, funding and other key areas that require your focus over the daily operational tasks of a business.

2. Stay out of what you don’t really know or understand. 

Not many founders have backgrounds in finance or even a working knowledge of accounts payable, accounts receivable and taxes. It’s better that a professional who took courses and was certified in these areas handle those aspects of the business.

That way,  mistakes will be less likely, as well as issues that could cost you more money. Remember, if you miss a bill or forget to pay something important, this will significantly impact your business credit. 

3. Calibrate a work-life balance. 

While you could focus on core business needs and handle everything else in your startup, the problem is you’ll have no time left at the end of the day or week for yourself or your loved ones. Therefore, you’ll be missing that balance every person needs in order to Stay healthy and not burn out on what you are doing.

4. Get a different perspective on the business. 

Although you may believe you have a good idea about the state of your startup during the development phase, it helps to have another pair of eyes on this.

Your bookkeeper can put the financials in order and run reports showing how you are doing each month, where the funds are going and how your efforts are paying off (or might need improving upon). He or she will give you that "big picture" through the numbers being crunched.

5. Escape the tedious aspects of business. 

It’s hard to imagine that the financial aspects of your business make you excited. You likely have no passionate feelings about tallying up payroll or writing checks to pay the bills.

However, your bookkeeper may enjoy those tasks, so it makes sense to hand over these areas to someone who does them -- and does them well -- because of that motivation.

6. Make sure everything is paid on time. 

Between traveling, keeping the startup moving forward, putting out the daily fires that pop up and staying balanced, something most likely gets left out along the way. And that often ends up being the bills that need to get paid.

You don’t want your credit impacted by late or forgotten payments, so put a bookkeeper in charge to give you the confidence that everything has been handled on time.

7. Ensure correct tax filings. 

The last thing you want is to get audited or have the taxman after you just because you forgot those quarterly or annual tax filings. Depending on the type of business structure you’ve created for your startup, you will have various tax requirements, including estimated tax payments, corporate tax payments, 1099s for contractors or freelancers and other filings.

It’s ideal to find a bookkeeper who can handle taxes a well as payroll and other financial issues.

8. Maintain cash flow. 

Because you are so busy, you may not realize that there are outstanding payments from your client base. Any late payments here could infringe upon the cash flow you need to keep your startup humming along.

With a bookkeeper working for you,he  or she can stay on top of this and send out reminders to make sure your cash flow remains optimal. This will also look good when it’s time to seek another round of funding because you can show positive cash flow you might not have been able to show without that assistance.

9. Resolve conflicts of interest with any business partners. 

With more than one founding partner, issues could arise where each partner has some idea of how the money should be spent and how to easily access it. Otherwise, conflict could arise that could impede the progress of your startup.

That's why a bookkeeper should be the gatekeeper of the money, creating the necessary approval processes that stop  partners from just withdrawing money.

10. Reduce the cost of financial obligations. 

Although you may think you save money by doing everything yourself, the fact is that a professional bookkeeper actually saves you more. That’s because there is a reduced level of risk for human error, lack of knowledge, missed payments and tax obligation due dates and delayed accounts receivable.

Plus, your time is money that you could be using toward getting your new business running and bringing in the revenue to move to the next level.

From the time and money savings, to the focus on expertise and greater cash flow, a bookkeeper makes good business sense for your startup. So, go start the hiring process today.

Inactive ABNs subject to cancellation

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Periodically, the Australian Business Register (ABR) checks its records for Australian business numbers (ABNs) and automatically cancels those that appear inactive.

These checks are occurring throughout 2018.
Sole traders, partnerships or trust ABNs may be cancelled if they have told the ATO they have stopped their business activity, declared no business income for the last two years or not lodged a business activity statement (BAS) or income tax return for more than two years.

Those with outstanding lodgements are advised to bring them up to date or face possible ABN cancellation. 

Sole traders, in particular, often have forms outstanding because they think there is no need to lodge if their income is below the tax-free threshold. However, sole traders must lodge the individual tax return including the supplementary section, and business and professional items schedule for individuals, regardless of their income.

Maintaining your ABN registration is important as the public uses ABN Lookup data to verify business and GST status

Home office Expenses / working from Home

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Home office expenses / working from home

You may be entitled to claim deductions for home expenses including a computer, phone or other electronic devices you are required to use for work purposes, as well as a deduction for running costs.

As an employee, generally you can't claim a deduction for occupancy expenses, including rent, mortgage interest, council rates and house insurance premiums.

Claiming a computer, phone or other electronic device as a work-related expense

If you are an employee and required to use your computer, phone or other electronic device for work purposes, you may be able to claim a deduction for your costs.

Running costs

If you perform some of your work from a home office, you may be entitled to a deduction for the costs you incur in running it, including:

  • for home office equipment, such as computers, printers and telephones, the cost(for items costing up to $300) or decline in value (for items costing $300 or more)
  • work-related phone calls (including mobiles) and phone rental (a portion reflecting the share of work-related use of the line) if you can show you
    • are on call, or
    • have to phone your employer or clients regularly while you are away from your workplace
  • heating, cooling and lighting
  • the costs of repairs to your home office furniture and fittings
  • cleaning expenses.

Records you must keep

You must keep records of home expenses, such as:

  • receipts or other written evidence of your expenses, including receipts for depreciating assets you have purchased
  • diary entries you make to record your small expenses ($10 or less) totalling no more than $200, or expenses you cannot get any kind of evidence for, regardless of the amount
  • itemised phone accounts from which you can identify work-related calls, or other records, such as diary entries (if you do not get an itemised account from your phone company)
  • a diary you have created to work out how much you used your equipment, home office and phone for business purposes over a representative four-week period.

UBER - GST or NO GST Registered

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DRIVER
There are a number of tax implications for Drivers, and these should be taken seriously! In 2017, the ATO issued a Media Release stating that it is collecting names of Drivers directly from Uber (and other sharing economy Facilitators such as Airbnb) and will cross-check these names to the Driver’s tax returns and Business Activity Statements to ensure that income tax and GST obligations have been met. Therefore, there is a high likelihood that non-compliant Drivers will be detected by the ATO.  

INCOME 
Income from a Driver’s ride-sourcing activities must be declared as assessable income in a tax return irrespective of the amount they earn, and irrespective of whether they have another job. The amount to be declared is the full fare (including or “grossed-up” by the Uber Fee) less GST. The full fare amount must be declared in a Driver’s personal tax return (or in an entity’s return if they are operating through a company, trust etc.). If the driver is operating as an individual (not through an entity), in their personal tax return they must select the code for their main occupation. If their main occupation is ride-sourcing, they should select the Business industry code 46231 (taxi service operation).  

EXAMPLE – FARE BREAKDOWN
Simon is a full-time school teacher who, to earn extra income, signed up as a Driver with Uber in April 2017. On one of his rides, the Rider was charged $110. The Uber Fee was $27.50, and ultimately Simon received $82.50. (This figure is indicative only. The Uber Fee will vary depending on a range of factors).  
 In this scenario, Simon must declare $100 as assessable income in his tax return (being the full fare of $110, less GST of $10).   
 

TIP
Unlike salary and wages, because a Driver’s ride-sourcing income has no tax withheld when paid to them, a Driver may end up with a tax bill at year-end. To avoid this, the Driver can make voluntary tax pre-payments to the ATO. Alternatively, they can voluntarily enter into the PAYG instalments system which allows them to make provision for an anticipated tax liability at year-end by paying small amounts of tax during the year to offset tax payable on their ridesouring income. 

GST

Under general GST law, you are only required to register for GST where you are carrying on an enterprise and your annual turnover is $75,000 or more. However, where your enterprise involves providing ‘taxi travel’ you must register for GST irrespective of the level of turnover. The Government chose back in 2000 when the GST system was introduced to apply compulsory registration to taxi drivers for several reasons including:  
 
• To avoid the confusion created if some taxis did not charge GST, but others did  

• Avoiding the added problem that would arise if a passenger was using a taxi for a business trip (creditable acquisition). In such a case, the passenger would want to be able to claim GST credits for the GST component of all fares  

• Meter rates are set by each State authority. After 1 July 2000, all meters were adjusted to reflect the GST. If some drivers were registered but others were not, all would be collecting the higher rate. This would disadvantage drivers who had to be registered if the standard $75,000 turnover registration threshold applied.  
 

The GST legislation defines ‘taxi travel’ as travel involving transporting passengers by taxi or limousine for fares. The ATO adopts a broad interpretation of ‘taxi’ to include cars made available for public hire to transport passengers in return for a fare (but not including trucks and bike courier services). Thus, Uber drivers are caught by this interpretation. Although Uber appealed this ATO interpretation to the Federal Court, in February 2017 the Court unanimously ruled in the ATO’s favour that making your car available for ride-sourcing constitutes taxi travel. Uber are not appealing against this decision, thus this is settled law. Therefore, Drivers must register for GST if signing up with Uber, irrespective of the level of turnover. From a Driver’s perspective, they are financially better off registering for GST anyway, as many of the costs they incur while driving for Uber will attract GST (see earlier list of expenses). Without a GST registration, there is no ability to claim back the GST component of these expenses. Having registered for GST, Drivers:

• Must pay to the ATO GST on the full fare ($10 in the earlier example), and

• Can claim GST on business expenses (see earlier list), taking into account any private use of the vehicle.

Drivers must register in order to properly comply with their tax obligations such as remitting the GST component of the fare. In the event that a Driver does not register for GST and the ATO later detect this, it will be the Driver (not Uber) that will be liable for the unpaid GST (to the ATO) on all fares. Additionally, interest and penalties for failing to pay the GST on time will likely be imposed. Therefore, irrespective of the fact that Uber do not compel Drivers to register for an ABN and GST, Drivers should do so as they are the taxpayers who will be left exposed in the event of nonpayment of GST on fares. In this sense, the GST risk and ultimate liability sits with the Driver.

 

DEDUCTIONS
Expenses (less GST) incurred by Drivers in operating their ride-souring activities are deductible. As per the following table, not all expenses will be deductible; while expenses that are deductible may need to be reduced/apportioned to take account of any private use of the vehicle: 

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EXAMPLE  
Returning to the earlier example, Simon can claim a $25 deduction for the Uber Fee (being $27.50 less $2.50 GST).     
 
In instances where a vehicle is being claimed in the Driver’s personal tax return, the costs will be claimed using either of the following method: 
 
1. Cents per Kilometre Method
Whereby you claim a set number of cents per kilometre travelled (currently 66 cents). The advantage of this method is very little record keeping is required. You only need to be able explain how you arrived at your calculation – you do not need any documentary evidence in the way of recepts or log books etc. Even where you travel more than 5,000 kilometres, you may still elect to use this method (and save the hassle on the record-keeping requirements that are required under the logbook method) by capping your claim at 5,000 kilometres. In summary, this method can be appealing to Drivers who: 
o Have travelled less than 5,000 business kilometres o Have older vehicles (therefore depreciation and interest costs are low) o Have not kept, or do not wish to keep, records of kilometres travelled.  This method incorporates all car expenses including petrol, servicing, depreciation, etc. You can make no further car expense claim.  
 
2. Logbook Method
 
Under this method, your claim is based on the business use percentage of each car expense, which is determined by a logbook that must have been kept for a minimum 12-week period. 

This logbook must be updated every 5 years or where there has been a change to the percentage of business use (by more than 10%). To ease the record-keeping burden, we would encourage the download of one of the innumerable logbook ‘apps’ on the market, either from the App Store or Google Play as the case may be. In summary, under this method you can claim all expenses that relate to the operation of the car, at your percentage of business use, as established from your logbook. This method generally gives the best result where the vehicle has substantial business use.  
 Drivers can calculate their claim and determine which method provides the largest deduction, by using the ATO’s Work-related car expenses calculator on its website.  
 

If you have any other questions, please feel free to call us on 0424 365 365 or email us on info@365accountingsolutions.com.au