How to apportion your expenses between personal and income-producing use

Short answer:

If you drive your car as well as sharing it, then you will need to apportion your costs accordingly using one of two methods: the cents-per-kilometre method; or the logbook method. It is worthwhile working out your costs using both methods, and choosing the one that gives you the highest allowable deduction. The ATO lets you choose whichever method you prefer. Even though the cents-per-kilometre method is simpler, you may be able to claim more using the logbook method - especially if you have purchased your car in the past 4 years and have substantial depreciation to claim.

Cents-per-kilometre method

  • This method allows you to claim  a set amount for each kilometre the car is driven by borrowers, as shown in your Car Next Door statements. For the 2018-19 financial year, it’s $0.68 per kilometre.
  • However you can only claim up to a maximum of 5,000km per year, giving a maximum deduction of $3,400 for the 2018-19 financial year ($0.68 * 5,000).
  • This method captures all your running costs, including depreciation, interest, registration and insurance, so you can’t separately claim those costs. (You can still claim your Car Next Door membership fees though).
  • You should keep copies of your Car Next Door monthly statements with your tax records to show how you calculated the number of kilometres driven by Borrowers.

Logbook method

  • This method is based on maintaining a log book for 12 continuous weeks showing the total kilometres driven by your car during this period and the kilometres driven by Borrowers. Using these figures, you can work out the percentage of kilometres that were related to the car’s income-producing use. 
  • The ATO has made it very simple to use the logbook method, using Car Next Door’s record of Borrowers’ kilometres. You just need to:
    • Record your car’s odometer (doing this on the first day of the month keeps things simple, but isn’t necessary)
    • 12 weeks later, record the odometer again
    • Check your Car Next Door booking records for the number of kilometres driven by borrowers during this 12-week period; and
    • Calculate the percentage of your car’s use that is your personal use.
  • You can record the numbers on paper or electronically - there is no special document or form that your ‘logbook’ needs to take.
  • A logbook is valid for 5 years, so if you do a logbook and determine that your personal use is 60% of your car’s total use, then you can use this percentage for the next five years of tax returns. You can start a new one anytime though. For example, if you calculate your private use percentage during a period when you are using the car a lot, but then later you find that you’re not using your car as much, it may be worth doing another logbook. 
  • If you are using a logbook from a prior year, you still need to keep a record of the opening and closing odometer readings for each financial year. 

Special rule for Utes and vans

The ATO applies different rules for vehicles that are a “panel van or utility truck [Ute], or any other road vehicle designed to carry a load of less than 1 tonne (other than a vehicle designed principally to carry passengers)”. 

A panel van is classified by the ATO as a “solid rigid-bodied, non-articulated car, smaller than a truck, without side windows”. 

For these vehicles, you can divide your costs based on the percentage of time that it is available for bookings. So if it is available for bookings 90% of the time, you can claim 90% of the costs. 

Your vehicle’s total availability for the last financial year is shown in your stats dashboard.

Related articles

What income you need to declare in your tax return
What costs you can claim in your tax return (including depreciation)
Tax requirements for sharing a car that is owned by someone else or jointly owned
Can I claim a Car Next Door loss against my salary and other income? 

 

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