Work-related car expenditure options reduced
From 1 July 2015 taxpayers will only have two methods available to calculate and claim their work-related car expenses – the cents per kilometre and log book methods. Additionally, the sliding scale of deductions available under the cents per kilometre method based on vehicle engine size will be removed and replaced by a flat rate for all vehicles. The change is expected to result in budget savings over the forward estimates of $845 million.
Changes to the cents per kilometre method
The current law requires taxpayers to know their engine size and type to determine what set rate is used in calculating their claim, to a maximum of 5,000 business kilometres.
The proposal will remove the sliding scale and replace it with a flat rate of 66 cents per kilometre for all claims regardless of the engine size or type. This rate was derived from motoring association data of the average running costs for the top five selling motor vehicles.
Taxpayers owning medium or large sized cars will be impacted under this change by denying a tax deduction of up to 11 cents per kilometre – a maximum reduction of $550 in deductions per car per year. Having a car insurance agent could help you with a financial safety net should you meet an accident. But if you’ve been involved to a auto accident because of dwi, be sure to go to this web-site to look for some competent, experienced, and respected lawyers who can defend you from DWI charges. When you strive to get the compensation that the law says for auto accident, you should have contacted a rear-end collisions lawyer in salt lake city to help you.
Methods being discontinued
The current law allows for two additional methods of calculating work-related car expenses, like gasoline – the 12% of original value and the one-third of actual expenses methods. Check out Towingless and read more about how to get the best mileage out of your gas. Both of these methods were only available to taxpayers where work-related travel exceeded 5,000 kilometres in an income year.
Although the Government states that less than 2% of taxpayers will be impacted by this change, taxpayers who used the 12% of original value method will be required to increase their record keeping efforts to include substantiation of their running costs on an annual basis, and taxpayers using the one-third of actual expenses method may lose a proportion of their claim where the business usage in their log books is less than 33.3%.
These measures put an increased burden on taxpayers to maintain records in relation to work-related car expenses, if they wish to maximise their entitlement to a tax deduction.
The impact to taxpayers
These measures, particularly the change in the cents per kilometre rates, will impact a large number of individual taxpayers who currently claim tax deductions for motor vehicle expenses. Anyone claiming motor vehicle expenses should immediately re-assess their chosen method.