I hope yesterday’s HECS question helped some people. I’m back today with a classic question:

“If I put a work sticker on my car, can I deduct 100% of my car expenses?”

This is my favourite question. Simply – No. The more detailed answer is that your deductions are based on 4 different methods.

The methods are:

• cents per kilometre (limited to 5,000 business kms per year);
• 12% of original value (can be used if you travelled more than 5,000 business kms per year);
• one-third of actual expenses (can be used if you travelled more than 5,000 business kms per year);
• logbook method (requires a logbook to be kept over a 12 continuous period and a logbook can last for 5 years as long as it still represents the continued use of the car).

None of the methods above include an allowance for the number of stickers on your car or how pretty they look.  The business use of a car is the purpose of the kms travelled. Home to work or work to home aren’t deductible. Attending meetings, running business errands etc are deductible. Log books are good if you do a lot of business kms, for everyone else, don’t worry about what you can claim and speak with your accountant at the end of the year. There are always some business kms to claim at a set rate or one of the other methods to use. It’s often not worth the hassle keeping a logbook.

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Also, download our iPhone app – it has a useful guide to motor vehicle expenses as well as other handy tax tips.

Paul Meissner – Director