Another year another ATO crackdown!
It seems each year, the ATO chooses a theme to focus its attention on when it comes to work related expenses.
In years past, we've seen crackdowns on laundry, travel and self-education.
This time round, the focus could fall on car expenses.
Many small-medium businesses work on the principal that if the business incurred an expense, then it must qualify as being a deductible.
Our response to this is may be, may be not!
Let's first look at the ATO rules on work related expenses.
Why is the ATO focusing attention on car expenses?
The ATO is particularly concerned by a pattern where a significant proportion of claims were 'right at the limit that did not require detailed records'.
Under current law, deductions using the cents per kilometre method do not require written evidence if no more than 5,000 kilometres are claimed.
Previously, there were 4 methods to calculate and claim work related car expenses.
The ATO has since eliminated the first 2 methods.
Now there are only 2 methods to calculate car expense claims on your tax return:
So, which method is best for you?
Well, it depends very much on how you use your car for work and of course, how much you use it.
Here's a brief overview of each method.
o Interest on loan costs
o Other running costs
Consult with your accountant as to which method is best for you and your business.
For more information or to schedule a no obligation consultation, get in touch with us today or call us on (02) 998 4033.