Assistant Treasurer Josh Frydenberg has flagged changes to motor vehicle tax deduction claims:
- the 12 per cent of original value and one-third of actual expenses incurred calculation methods are to be discontinued, and
- the cents-per km rate is to be set at a flat average rate of 66 cents per kilometre, regardless of vehicle engine size.
The main rationale for the first change is essentially that these methods are only used by a tiny percentage of taxpayers.
The change to the per-km rate to a flat average of 66 cents would create some winners and losers, but is justified as reflecting the lowering of actual costs in recent years, and in the interests of administrative expediency. * The current rates based on engine size range from 65 cents per km to 77 cents per km.
The change being proposed is specifically in relation to expenses claimed for cars people own, not salary packaged cars taxed under fringe benefits rules.
The full log book method of claiming car expenses will remain.
These measures were referenced in the 2015 budget to commence in the 2015-16 year.
- The Assistant Treasurer’s full article setting out reasons for the proposed changes is here.
- See also – claiming work related car expenses.
- Update 25 Nov 2015: Amending legislation giving effect to the above changes enables the Commissioner to set future per kilometre rates (potentially higher than 66 cents) in order to better reflect the actual operating costs of vehicles based on available evidence. The legislation has now been passed.