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When it comes to tax, a ute may not be a car

Brent called accountant GAIL FREEMAN wanting help with claiming use of his ute in his tax return.”The last accountant I saw claimed it at the Tax Office rate because I haven’t got any receipts,” he said.

I TOLD  Brent we needed to establish whether his ute qualified as a car or “other motor vehicle” for tax purposes. Both were treated differently. 

Gail Freeman.

A car is defined as a passenger vehicle, not being a motorcycle or similar vehicle designed to carry a load of less than one tonne and fewer than nine passengers. If the vehicle is not a car it is regarded as an “other motor vehicle”.

“If your ute is a car there are two different ways that it can be claimed,” I said.

“These are the cents-per-kilometre rate and the logbook method. The cents-per-kilometre method has a number of requirements. The main one is that the maximum number of kilometres that can be claimed in the year is 5000. So if you travel more than 5000 kilometres you must either limit your claim to that number or use the logbook method. 

“The other requirement for using the cents-per-kilometre method is that this covers all tax-deductible usage for any purpose, it cannot be applied to motorcycles and vehicles of greater than one tonne. You also need to be able to demonstrate that you made the journeys.

“We also need to assess whether your ute is a car. The way to do this is quite complicated. To determine if the vehicle has a carrying capacity of one tonne or more, the payload capacity needs to be calculated. 

“The payload capacity is the gross vehicle mass (GVM) as specified on the compliance plate reduced by the basic kerb weight of the vehicle. 

“The basic kerb weight is the weight of the vehicle with a full tank of fuel, oil and coolant and the spare wheel, tools (including the jack) and factory-installed options. The weight of passengers, goods or non-factory fitted accessories is excluded.” 

Brent told me the GVM of his ute was 3200 kilograms and the basic kerb weight was 2135 kilograms, which made the payload capacity (3200kg less 2135kg) 1065 kilograms. 

“This is greater than one tonne so you cannot use the cents-per-kilometre method,” I told Brent.

“There is also a special rule that if you only use the vehicle for travel that is minor, infrequent and irregular and is not work travel, then you can claim 100 per cent of costs. This is travel between your home and work and any detour that adds no more than two kilometres to the trip and for private journeys there is no return journey greater than 200 kilometres and the total of these is less than 1000 kilometres. 

“If that is not the case for you then you will have to do a logbook and claim your expenses on that basis.”

Brent said: “I only have one vehicle, so that’s what I’ll have to do. Thanks, Gail.”

If you need guidance on claiming your car or any other tax-related matter contact the friendly team at Gail Freeman & Co Pty Ltd on 6295 2844, email info@gailfreeman.com.au or visit gailfreeman.com.au

Disclaimer
This column contains general advice, please do not rely on it. If you require specific advice on this topic please contact Gail Freeman or your professional adviser.
Authorised Representative of Lifespan Financial Planning Pty Ltd AFS Lic No. 229892.

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