My Car Is Covered In My Business Logo! Claim 100%. Please Don’t!

Claiming motor expenses is one of the most frequently asked questions I get asked about. If I happen to be advising a new business start up then I am certain I will get asked a motor expense question.images

Covering your motor car or ute in your business logo and sign does not mean you can claim motor expenses. The ATO has very specific rules when it comes to claiming motor expenses in your business.

Firstly, if you operate a business via a company or a trust then the company or the trust has to actually purchase or own the vehicle.

If the company or trust does not own the vehicle it cannot claim any expenses unless the business is prepared to pay Fringe Benefits Tax (FBT) at 47%.

If you operate a business but you personally own the vehicle then you should not claim any expenses in the business and claim the expenses in your personal tax return.

If your business owns a vehicle then there are really only 2 ways you can claim expenses. They are:

Logbook Method

Using this method you need to maintain a logbook for 12 weeks.

This logbook can be obtained from your local newsagents or you can use various apps now available to keep them electronically.

Basically, you keep a track of all travel including all personal and business travel for a 12 week period.

At the end of the 12 week period you work out the percentage of personal use and business use. Eg you have 10% personal use and 90% business use.

downloadThis means at the end of the year the business is able to claim 100% of all the expenses relating to the business.

You as the user of the vehicle then has to pay back 10% of the personal use to the business. You also need to pay the business GST. The actual calculations are a bit complex so you should seek advice from your accountant.

This log book must be updated every 5 years unless there has been a significant change in use for the vehicle.
You need to register odometer readings for the start and end of the period that the business owned or leased the car.

You need to detail all the kilometres you have travelled for the log book period.

You will still need to keep receipts to justify your claim.

Statutory Method

This is the second method and has undergone recent changes. The new system for new cars is as follows:

The business claims all expenses

The private use is calculated as follows:

Take the Value of car
Eg Value of car is $40,000
The calculation is $40,000 x 20% = $8,000

This is the amount which is classified as private and you need to repay this back to your company/ trust

If you use your car for work you are entitled to claim the expenses that relate to the business costs of using your car to do your job as a tax deduction.

Crystal Clear Bookkeeping will help you to save time and money with your bookkeeping by:

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