The Tax Office has confirmed the rate for work-related car expenses will rise to 68 cents per kilometre for the income year beginning 1 July 2018.
The new rate will affect those eligible individuals who elect the cents per kilometre method when calculating the income tax deductions for their work-related car expenses for the 2018-19 income year. This rate also applies to the following income years until the Commissioner of Taxation deems it should be varied (these rates are reviewed each year).
Taxpayers working out their car expenses for the 2015-16 year, 2016-17 year and the 2017-18 year should remember that the previous rate of 66 cents per kilometre still applies to their calculations.
When selecting the cents per kilometre method, eligible individuals:
– are not required to supply the ATO with written evidence of how many kilometres they have travelled;
– may need to show how they worked out their business kilometres calculations;
– cannot claim more than 5,000 business kilometres per car;
– and cannot make a separate claim for depreciation of the car’s value.
It is also important to note that the amount will take into account all the vehicle running expenses.