If you intend to run a business where certain staff have access to a vehicle for company purposes, you need to make sure that you keep on top of your tax obligations. For some, this can be easier said than done, but you certainly want to understand how the rules affect your operation to avoid any hefty fines from the ATO alongside those dreaded audits. What are the key points to remember when it comes to car tax deductions for your new business?
How to Claim
You can claim car tax deductions in a work environment in several ways. For example, if an employee needs to make a trip to fetch or deliver goods or has to attend a business meeting or a training seminar. If they need to meet multiple clients in the course of a day, then the journeys between each location are all allowable.
The costs of maintaining these vehicles can also be claimed, including tax and insurance premiums as well as petrol. You need to ensure that copies of all receipts are kept in a safe place in case of an audit.
Points to Remember
Remember, if you reimburse your employees for any work trips, they cannot then claim for that expenditure on their own personal returns. Also, the journeys between home and work are not allowable, even if they may take place outside of what could be considered "standard" working hours. Also, it doesn't matter if the workplace cannot be easily reached by bus or train (and therefore the car is the only option).
How to Approach Accounting
While employees can claim for car expenses against their own personal return by using the cents per kilometre or logbook method, companies have to use a different approach. In this case, they simply itemise the actual costs backed up by the appropriate receipts.
Maintaining Records
It's very important to maintain full and accurate records and be able to substantiate any claims if asked. The tax authority will also cross-check your records as the employer against the records of any employees, should they submit a claim for car expenses themselves.
Clarifying Any Issues
If you're unsure how to handle vehicle expenditure from a tax point of view (especially when it comes to the line between individual and company accounting), make sure that you talk with a business tax accounting services company. They'll help put you on the right track so that you won't run into any problems with the ATO.
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