If your car is registered and owned in your business name, then you can claim the following as business expenses:
• Car registration and insurances,
• Petrol and servicing costs (even car washes to keep it looking pretty!)
• Financing costs
How much your business can claim, though, depends on the method you use. The two most common ways to do this are:
The Logbook Method
To maximise the amount of the car expenses you can claim for your business, you need to establish a business-use percentage — that is, the percentage that the car is used for work (versus personal use). To do this, keep a logbook over a continuous 12-week period to substantiate the business kilometers traveled by the car. The log is good for five years, and then you will have to track it again. It is this business percentage that you can claim of all the car maintenance expenses, including petrol, servicing, insurance, registration, and depreciation and financing on the cost of the car.
*There are three important things to note:
Traveling from your home to your work place is not business travel. You must reimburse your business for the percentage of the car expenses that is for your private use, or your business may be subject to Fringe Benefits Tax (FBT). Your business can only claim the business-use percentage of the GST paid as a car expense.
The Kilometres Method
There are two other, simpler methods you can use aside from keeping a logbook to claim car expenses. If you travel less than 5,000 kilometers in a financial year, you can claim a set rate of cents per kilometer (business travel only) as an expense. The ATO sets the rate each financial year. If you travelled more than 5,000 kilometers then you can claim 12% of the cost of the car or 1/3 of car expenses.
The claim on depreciation of the car is limited — it’s currently capped at $57,466. If you purchase a car that costs more than this amount, the depreciation expense is capped.