1 – “Business Kilometres”
When calculating “business kilometres” for either the cents per kilometre or log book method, trips between home and work are treated as private.
2 – Visiting a client
A common exception is where someone drives from home to somewhere else such as a client’s premises and then on to work, in which case both legs of the journey are treated as business kilometres.
3 – Minor tasks
This would not extend to relatively minor tasks such as picking up the mail on the way to work — the stop needs to have a genuine work-related purpose.
4 – Exemption
Another exemption is for carrying bulky tools or equipment to or from work, but this exemption is intended to be limited, and does not extend to items such as laptop computers or files.
5 – Log book method
If the log book method is used to calculate a business percentage for claiming car expenses, it is important to keep the log book for a minimum continuous period of 12 weeks, and to keep a new log book every five years, or when your circumstances change significantly (e.g. a major career change or change in role, where it would be expected that the level of business car travel would increase or decrease significantly).
6 – Log book method trap for luxury cars
Another trap with the log book method is that, when calculating your total car expenses to which the business percentage is applied, the depreciation charge must take into account the “luxury car depreciation cost limit” which is currently $57,581. Where a car costs more than this limit, the annual depreciation charge for this purpose must be calculated as if the cost was $57,581, regardless of the actual cost of the car, and this is something that the ATO will take a very close look at.