When using the cents per kilometre method your claim is based on a set rate for each work related kilometre travelled. It is an easy claim to make as it does not require you to maintain a log book or receipts for car expenses. However, you need to make a reasonable estimate on how many work related kilometres you have travelled throughout the financial year.
Example of a reasonable estimate:
I travel from the office to a client twice a week which covers a total distance of 10km. Then I estimate a total of 960km for the year (20km x 48 weeks = 960km). In this example I used 48 weeks due to 4 weeks of annual leave. Use how many weeks are appropriate for you.
It is important to understand that your estimate for work related kilometres does not include the kilometres you travel from home to work. It is generally the travel from one place of work to another or between home and an unusual place of work, such as a seminar.
Then after you make your reasonable estimate you can work out how much you can claim by multiplying the number of work related kilometres by the appropriate number of cents allowed based on your car’s engine size. This figure will take into account all the running costs of your vehicle. The maximum number of kilometres you can claim is 5,000km. If your reasonable estimate goes over 5000kms, you can still claim based on 5,000kms or you can use the other methods available (12% of cost method or 1/3 expenses).
Pro Tip
You can claim the kilometres that you travel to visit your tax agent each year to have your income tax return prepared.
Author: Allan Edmunds
Email: allan@faj.com.au
