Explore the ways to claim your fuel on tax

man filling car with petrol

As petrol prices continue their eye-watering ascent, everyone is looking for ways to cut back their fuel costs.

One avenue to take the sting out of trip to the bowser is to check if you can claim some of those costs on tax.

Chartered Accountants ANZ tax expert Michael Croker told the ABC that claiming fuel on tax is something everyone should consider this year.

“You might have been entitled to deductions in the past, but thought the cost was too small to claim,” he said.

“But now with fuel costs … it’s really hitting the back pocket.”

Read: Tax relief could be taken away from millions of Aussies

The Australian Taxation Office (ATO) sets some very clear rules about claiming fuel on a tax return, but before you dive into keeping all your receipts and filling out a logbook check your eligibility.

You can only claim on fuel if you spent the money yourself, the fuel was directly related to earning an income and there are suitable records to prove the expense.

The amount you can claim will also depend on if you are using your own car, leasing or hiring under a hire-purchase agreement or using a vehicle that is not defined as a car.

A car for taxation purposes is defined as a vehicle that can carry loads of less than one tonne and less than nine passengers.

Read: How to avoid late lodgement penalties at tax time

You can claim on fuel if you use your own car for work, attend work-related conferences or training, deliveries and travelling between two places of employment.

The ATO will accept fuel expenses based on two calculations.

The cents-per-kilometre method applies a straightforward calculation but can only be claimed for up to 5000km of travel per year, per car and the rate is set for the year. It was set at 72 cents per kilometre from July 2020.

As prices rise, it may be worth looking into the logbook method that requires much more detail, but taxpayers can claim other expenses including the cost of running a vehicle and any improvements made to the vehicle.

Read: Taxing wealth can solve ageing population’s health woes

And it might pay to investigate installing a logbook app on your phone.

Handwriting in a logbook can be mind-numbingly time consuming. The ATO’s myDeductions tool is available on the ATO app and has the added bonus that it can upload any records at tax time to easily facilitate lodging a return. MyDeductions can also be used for other general expenses and sole traders. However, there are other ATO-compliant logbook apps and most are free.

It’s also a good idea to use your phone to take a photo of any receipts as backup.

You can’t claim on any allowances you receive from your employer regarding travel or fuel and they must be included in your tax return. You also can’t claim any car or fuel expenses that are part of salary sacrifice.

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Written by Jan Fisher

Accomplished journalist, feature writer and sub-editor with impressive knowledge of the retirement landscape, including retirement income, issues that affect Australians planning and living in retirement, and answering YLC members' Age Pension and Centrelink questions. She has also developed a passion for travel and lifestyle writing and is fast becoming a supermarket savings 'guru'.

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