Changes to car expense claims are coming: fringe benefit tax update

Share on facebook
Share on google
Share on twitter
Share on linkedin

If you’ve ever used a vehicle for business travel, you’re already aware you can write-off part of your travel expense. You’re probably also aware of changes to the way travel expenses and Fringe Benefits Tax are calculated.

Changes from 2015 FBT year

Here’s the Cliff’s Notes version:

From April 1, 2014, the Australian Federal Government is changing the way you claim travel expenses. In the past you could claim expenses in two ways:

  1. The statutory method – a straight percentage of the cost of the car;
  2. The operational method – expense paid on personal vs work use of the car, calculated using a logbook.

The statutory method is being axed and everyone will use a logbook (this rule won’t apply to existing contracts which are not varied in any way).

Logbook made easy

The logbook has a bad reputation for being notoriously difficult, confusing and inconvenient. Plus your accountant l-o-v-e-d flipping through your dog-eared, smudged, illegible scribble. Really.

Thankfully an automated logbook is the answer to all our problems! YourCarLog.com is easy, accurate and is going to save you time and stress by using your Google Calendar, iCalendar or Microsoft Outlook calendar as your logbook. By simply inputting your destination address into your electronic calendar, Your Car Log calculates everything – with a bit of tweaking, it will also figure out what addresses are “private travel” and which are work-related.

How easy is that?! Have a look, sign up and make your accountant happy!

Remember some vehicles are FBT exempt

Remember there are also FBT exempt vehicles, such as vans and utes, that are designed for business use and therefore exempt from FBT.

See the full list here

Remember to treat your car like any other investment

Of all the assets in your business, a car is one of the most expensive and fastest depreciating (i.e. it’s value decreases at a rapid rate). This rate slows over time, so, in theory the longer you own a car, the cheaper it gets.

Furthermore, you usually finance a motor vehicle, so add an extra 8-10% on the cost.

Now, do the sums and draw the direct link between a “new car” and increase in revenue. Not just revenue, but, an increase in your revenue.

Do the numbers add up? If not, why not keep your current car, they are usually built to last for >20 plus years and if you need a hand weighing up the decision, contact one of our tax team to help you crunch the numbers.