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Budget 2015 – Changes to the way you can claim work related vehicle expenses.

First of all, none of these changes affect anyone who has salary packaged a car with a novated lease. They only affect people who use their car for work, and then claim a deduction in their tax return.

  • Removal of two methods of deduction
  • Changes to the ‘Cents per Kilometre’ method

Removal of two methods of deduction

Almost four million Australians claim deductions using the ‘Cents per Kilometre’, ‘Logbook’,  ‘12% of original value’ or ‘One third of actual expenses’ methods, however less than two percent use the ‘12%’ or ‘One third’ approaches. So, on the 1st July 2015 (if the bill passes) they will cease to exist.

If you currently drive less than 5,000 km/pa, and use the ‘12 percent’ or ‘One third’ methods, you have the option of using the ‘Cents per Kilometre’, or the ‘Logbook’ method.

If you currently drive more than 5,000 km/pa, and use the ‘12 percent’ or ‘One third’ methods, you have to use the ‘Logbook’ method.

Changes to the ‘Cents per Kilometre’ method

Affecting almost three million Australians, this is likely to have a larger impact. In the past, the deductions increased along with engine capacity, however the sliding scale will be removed, and replaced with a flat rate of 66 cents per km.

Per Kilometre Claim Rates & Affect on People Driving 5,000 km/pa

Rotary Engine Rate per Km
(Up to
30th June 2015)
Rate per Km
1st July 2015)
Up to 1,600cc Up to 800cc 65 cents 66 cents +$50
1,601 – 2,600cc 801 – 1,300cc 76 cents 66 cents -$500
Over 2,600cc Over 1,300cc 77 cents 66 cents        -$550

For those with larger engines, there will be a reduction in tax benefits, and for those with smaller engines, a slight increase. Additionally, for the first time, owners of Hybrid and electric cars will also be eligible to use the ‘Cents per Kilometre’ method to work out their deductions.

No opposition expected

And finally, Labour and Coalition Governments have both supported work-related vehicle tax deductions in the past, so, there is not expected to be any opposition to this proposal.

Posted by The Autopia Team

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