Using Personal Car for Work Related

Q&A Tax

Question:

Mr C used his personal car for work-related travel. The employer reimbursed all the running expenses
based on tax invoices provided however no reimbursement was received for hire purchase payments &
depreciation.

Mr C travelled 25,000 Kms in the last financial year for work. The question is ‘ can Mr C uses cents per
km method and claims 5,000 km as work-related travel?”

 

Answer :

If the individual client owned the car then the client should be able to use the cents per kilometre
method under Division 28 ITAA 1997 to deduct the car expenses up to 5,000 business kilometres.

However, private ruling 1011667363536 seems to suggest that where an employee is reimbursed for
the car running expenses (eg, fuel) and the reimbursement constitutes an expense payment fringe
benefit then the amount of deduction that would be allowed for their car expenses should be reduced
by the full amount of the reimbursement (per section 51AH ITAA 1936). This is regardless of which
method is used to calculate deductions under Division 28 and whether the employer did not reimburse
the client the hire purchase payment.

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