From 1 July 2015, the ⅓ actual expenses method and the 12% original cost method have been repealed, leaving two methods:
cents per kilometre
log book method.
For 2016, 2017 and 2018, use a single rate of 66 cents per kilometre for all motor vehicles regardless of size. For the 2019 tax year, the rate increases to 68 cents.
The Commissioner of Taxation will review the rate each year based on the average operating costs of a motor car.
There is no change to the log book method. The taxpayer must keep a log book and the percentage of business use as the claim is based on the business use percentage of the expenses for the car. See this link for information on the log book method.
Both the ATO’s schedule W and MYOB’s Motor vehicle worksheet have been updated to remove the repealed methods.
The rollover of the Motor vehicle details from previous years has not been affected and where either of the repealed methods was used in the previous year, the remaining required details of the vehicle are rolled into 2018.
All other functionality remains unchanged.
The item in the mve worksheet which provides for the allocation of motor vehicle expenses is at the bottom of the worksheet refer to Calculation of motor vehicle expenses.
If the taxpayer received assessable income from their work as an employee outside of Australia, including any assessable foreign employment income shown on a Payment Summary, you can claim any work-related motor vehicle expenses the taxpayer incurred in earning that income at this item.
Motor vehicle expenses related to foreign employment income subject to PAYG Withholding that you have included at item 1 should be included at item 20 label U to arrive at Net foreign employment income subject to PAYG withholding.
There is currently no integration to items in the Company or Fund returns or their worksheets and any values calculated in the mve for these form types need to be keyed at the relevant label in the return or attached worksheet.
The rules regarding Cost Price Limit (DCL) are observed and the set rate per Km up to 5,000 work-related kilometres travelled is applied to the Cents per Km method. To preview current year rates, click Maintenance > Tax Rates > Motor Vehicles.
If more than one method of calculating car expenses is completed, the worksheet will automatically choose the method that gives the taxpayer the largest deduction. To change this method, click [F10] at Override system-selected method and select your preferred method.
If the car was used for both business and work-related purposes during the income year, the same method of calculation must be used for each purpose.
Vehicle Details: These details are for record keeping purposes only and for when there is more than one car used in earning your assessable income, they are used in the preparation of the Motor Vehicle Substantiation Declaration.
Using the logbook method involves calculating the business use percentage of the car. You can then claim this percentage of each car expense. Do not include capital costs such as the purchase of the car or improvements to it. A logbook, odometer records and written evidence for all car expenses except fuel and oil costs must be kept.
The logbook is valid for five years. If this is the first year you are using this method, you must have kept a logbook during the current income year. The logbook must cover at least 12 continuous weeks. If you started to use your car for business purposes less than 12 weeks before the end of the current income year, you are able to continue to keep a logbook into the next income year so that your logbook covers the required 12 weeks. If you want to use the logbook method for two or more cars, the logbook for each car must cover the same period.
If you have not kept a logbook for the 5 income years prior to the current, you must have kept a new one for the current income year. If you did not keep a new logbook for the current income year, you cannot use the logbook method.
If your car use changed, make a reasonable estimate of what your business use percentage would have been for the whole of the current income year, taking into account your logbook, odometer and other records, any variations in the pattern of use of your car and any changes in the course of earning your income.
The Business% shown in the Log Book field is not used in any calculation in this worksheet. However, it will be integrated to the ATO work-related Expenses schedule (Schedule W) if that schedule is attached to the return.
This information is included for the sole purpose of integrating information to the ELS Schedule W. Do not complete these fields if you are not required by the ATO, or your client is not required by the ATO, to lodge a Schedule W for the current year.
Information Code: Up to four codes are provided and if more than one applies, select the ones that best describe how the claim was estimated.
Additional Information: Provide reasons to support the claim, if the Information codes selected include either:
O - Other evidence, or
T - Other calculation.
These values are calculated by the system from the details entered at items 1 and 2, and Tax selects the calculation method that produces the highest deduction amount. To change this method, press F10 at Override system-selected method and select your preferred method.
Additionally, the amount shown at Total Work-related M/V expenses can be allocated proportionally to items in the main return and to other schedules attached to the return. The default location is D1 – Work-related car expenses and if no Allocation selection is made, the entire amount will integrate to D1, label A.
By default, the Motor vehicle expenses deduction is 100% to item D1 and from D1 that same percentage or whatever percentage is allocated to D1 will pre-fill the Schedule W immediately the Schedule W is opened. Therefore, unless part of the motor vehicle expenses calculated using the mve worksheet is to be claimed at another item or items in the individual return, there is no need for further allocation at item 5 in the mve.
If you select schedule W to integrate some or all the motor vehicle expenses (other than D1), you must select the schedule W item number field where only items D2, D4 and D5 are available.
Completing the field at item 5
Where the mve expense is to be apportioned across more than one worksheet or items in the return, press Ctrl+Insert to create an additional set of fields.
Select a label to allocate the expense: press F10 and select from the list of schedules and items in the return where integration can occur.
Individual return integration points are:
Work-related car expenses (item D1)
Work-related travel expenses (item D2)
Other work-related expenses (item D5)
Cost of managing tax affairs (item D10)
Business income worksheet (Schedule B)
Primary production income worksheet (Schedule C)
Dividend expenses (item D8)
Partnership distributions (Item 13)
Trust distributions (Item 13)
Interest expenses (item D7)
Rental income (item 21)
Work-related self-education expenses (item D4)
Work-related expenses (Schedule W)
Partnership and Trust return integration points are:
Other Deductions (item 18)
NPP Income and expenses (Schedule B)
PP Income and expenses (Schedule C)
Deductions relating to Australian investment income (dai)
Rental Schedule (rep)
Item: When the mve is opened from an Individual return, this field is only active if the amount is to be allocated to one of items in the ATO work-related expenses schedule W or to either of PP or Non-PP income in the Distribution from Partnerships worksheet (dip) and Distribution received from Trusts worksheet (dit).
Schedule/Insert: This field is only active where you have selected either Rent, Primary Production (Schedule C) or Non-Primary Production (Schedule B) or the Work-related Deductions Schedule (W). That is, because all these worksheets permit more than one to be created or have a choice of item within that schedule.
‘%’ (percentage): Enter the relevant percentage amount in the format 000.00, for example, for 50%, key 50.00.
Amount: The Amount is calculated as the Total Work-related M/V expenses multiplied by the percentage.
Round: Where the allocation of motor vehicle expenses results in a rounding error which would cause an over-allocation, Tax provides the facility to choose how rounding is to be adjusted. The selections available to you are:
Natural rounding - expense amounts of 50 cents and above are rounded up and included in the allocated expense, while expense amounts of 49 cents and below are rounded down with the odd dollar, if any, included in the Total unallocated / over-allocated expense.
D: Round down, when selected, the odd dollar will be included in the Total unallocated / over-allocated expense.
U: Round up, when selected, the odd dollar is added to the expense for the label selected.
Total motor vehicle expense allocated: This is the total of the apportioned amounts.
Total unallocated / (over-allocated): Where there is a value other than zero in this field, you will need to adjust the percentages