22 Jun Confirmed. Car Expenses rate rise confirmed by the ATO.
Confirmed. Car Expenses rate rise confirmed by the ATO.
The cents per kilometre used for calculating work-related motor vehicle expense deductions will be increased in the next financial year.
The Australian Tax Office has just announced that the cents per kilometre deduction rate will rise from 68 cents to 72 cents for the financial year starting on the 1st July 2020.
The cents per kilometre method allows taxpayers to claim up to 5,000 work-related kilometres per vehicle each year. This is claimable without requiring writing evidence.
According to the ATO, one in five taxpayers earning similar amounts in similar jobs actually claim the exact 5,000km limit.
This was flagged by the ATO in recent years when 3.6 million taxpayers claimed more than $7.2 billion between 2017 and 2018 for work-related car expenses.
Due to the impacts of COVID-19 and enforced restrictions, the ATO has expressed that they expect a significant difference in tax claims this year.
Since work-related travel had been restricted for four months, there will be a significant decline in work-related motor vehicle expense claims.
However, this is expected to be counterbalanced by significant increases in working-from-home claims.
If you want to find out more about the rise in work-related vehicle expense deductions, or you have any other tax-time related questions, talk to the team of professionals at Simmons Livingstone and Associates today.