Changes to Motor Vehicle Deductions

Previously, taxpayers had the option of using either set rate per kilometre, log book, one third of actual expenses or 12% of the cost of motor vehicle (up to statutory car limit) to calculate their motor vehicle expenses.

The Federal Government announced in the recent budget that the one third of actual expenses and 12% of cost of the motor vehicle options will be scrapped from 1 July 2015.

They also announced that the set rate per kilometre method will be varied down to a flat rate of 66 cents per kilometre travelled (irrespective of the engine displacement). This will reduce the set rate kilometre deduction by up to $500 for those travelling in excess of 5,000 kilometres per financial year.

Given the abolishment of these methods, coupled with scaling back of the set rate per kilometre method, PKF Mack is encouraging clients to complete a motor vehicle log book to establish a business use percentage over the required 12 week continuous period. Once completed, this logbook will be valid for five years or until you complete another.

If you are interested in completing a log book to maximise your motor vehicle deductions, please contact your PKF Mack Partner and we will arrange for one to be delivered to you with further information.