One of the most common problems we run into with building and construction workers is confusion about motor vehicle expense claims.
We often hear this: “I drive a ute, so I should be able to claim 100% of my expenses?”
However, this is not always the case and it’s a little more complex than that. So, I’d like to clear that up here.
Motor vehicle expense claims for a company or trust
When your motor vehicle is owned by your company or your family trust and you are an employee of that company or trust, the vehicle is considered a fringe benefit provided by the company or trust to you as the employee.
This means that the company or family trust claims 100% of the motor vehicle expenses for tax purposes.
The company or family trust then deals with the benefit provided to you, the employee, following the Fringe Benefits Tax legislation.
Keeping a log book may reduce the Fringe Benefits Tax liability, if the business use is high.
Please note that the private use of the motor vehicle is exempt from Fringe Benefits Tax if ALL of the following criteria are satisfied:
- The vehicle is a ute or other commercial vehicle not designed principally to carry passengers;
- Non-work related use is minor, infrequent and irregular; and
- The employee’s private use is limited to:
- Travel between home and work;
- Travel that is incidental to travel in the course of duties of employment.
Motor vehicle expense claims as a sole trader or employee
There are currently two methods for claiming motor vehicle expenses for sole traders and salary and wage earners.
- Cents per kilometre method – no log book is required and you can currently claim up to 5,000km per motor vehicle. The kilometres claimed needs to be a reasonable estimate and the ATO can ask you how you calculated your claim.
- Log book method – a log book is required to be kept for 12 consecutive weeks and needs to represent your travel throughout the year. Each logbook is valid for five years. Maintaining a log book is beneficial if your business/work use is high.
Vehicles other than cars such as utes & vans
When driving vehicles other than cars, with a carrying capacity of more than one tonne, you are able to claim expenses such as fuel and oil, registration and insurance, repairs and servicing, interest on car loan, and depreciation.
Although a log book is not required as the vehicle is not a car, the Australian Taxation Office recommends a diary be kept to show how much of the expenses relate to business and personal use of the vehicle.
This means that you can’t claim 100% of the expenses for your ute or van, where the vehicle is used for private purposes. If this vehicle is your only vehicle, then some of these expenses will be private and need to be apportioned.
Claiming motor vehicle expenses between home and work
To be able to claim on travel between home and work, you need to satisfy that you are required to carry bulky equipment AND that you have no secure storage place for your equipment provided at your work place.
Are you a building and construction worker needing some help with your vehicle expense claims? Please call me on 02 4322 9044 for a chat.