Tax Return:: 2023FY Car Expenses Tax Deduction (Cents per Km)

Hello, this is your tax accountant, P&C Tax Professionals.

Today, we are here to update you on the new cents per km rate which will be applicable to your upcoming 2023FY tax return.

To the much of our delight, there has been an increase in the cents per km rate from 72 cents per kilometre (which was previously available for the 2020-21 and 2021-22 financial years) to 78 cents per kilometre for the 2022-23 financial year. This means that you will now be able to claim a maximum of $3900 (5000km x 78 cents) under the cents per km method for car expense deductions.

Just as a refresher, we would like to cover some of the important points to keep in mind when using the cents per km method:

> The method uses a set rate for each kilometre you have travelled for work purposes

> The method allows you to claim a maximum of 5,000 business kilometres per motor vehicle, per financial year

> The method does not require written evidence which indicates the exact distance travelled in km (however, depending on individual circumstances, the ATO may ask you to show how you have worked out your work-related, business kilometres, e.g., in the form of diary records).

> The method uses a rate that is inclusive of all your vehicle running expenses. This includes your car registration fees, fuel costs, servicing and repair expenses, car insurance fees and any depreciation costs related to your car. Hence, if you adopt this method to account for your car expense deduction on your tax return, you cannot separately claim any of the costs mentioned above.

That’s all for now but if you have any additional questions, please feel free to contact us via our official Facebook Page (P&C Tax Professionals – Australia) or simply send us your enquiry to pnctax@naver.com.

Thank you and bye for now!