What car expenses can you claim on taxes?

There are four main methods that can be used when claiming a tax deduction for business-related car expenses.

Given that three of them require keeping at least some records, it is best to decide now which method you are going to use, before the financial year gets under way.

The method that doesn't require specific records is the so-called "cents per kilometre" option.

This enables you to claim a set number of cents for each business kilometre travelled.

While you don't need to keep a record of your actual car travel and costs, it can only be used if you are claiming no more than 5000km of business use.

If you are able to claim more you will need to use one of the other three methods.

One involves keeping a detailed log of your business travel for a continuous period of at least 12 weeks.

This is used to calculate the percentage of your car's running costs that can be claimed.

Alternatively you can claim 12% of the purchase price (up to a maximum price of $59,133) as a deduction, provided you can provide reasonable evidence the car was used to travel at least 5000km for business in the financial year.

The most demanding method from a record-keeping perspective involves claiming a third of your car's actual running costs.

These include such outlays as the cost of registration, insurance, servicing, petrol and finance.

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