Trying to get my head around the Kilometre Method On Car for Business usage? Can you help

Aerith-Waifu on 02/05/2021 - 20:23
Last edited 02/05/2021 - 20:28

https://www.ato.gov.au/Business/Income-and-deductions-for-bu…

Been reading this, cant get my head around, in the following case, what can be claimed and what cant be claimed?

Say if a guy just started a business selling hand made wooden toys, business is online only, 2 ways to get the item to his customers:

1: delivery to their door
2: sending goods off using Austpost

1: With the delivery to the door method, say his home is at ABC Street, his client is at CBA street, total one way distance is 10kms with 20kms return, can he claim the entire 20kms if he does the delivery to the clients door or can he only claim the 10kms as the return trip is coming home? (Provided he doesnt stop and do shopping on the way?)

2: With the postage method, if say the post office is 10kms away from his house and he needs to send out the goods everyday with a return trip of 20kms, can he only claim 10kms or can he claim the entire 20kms? (Provided he doesnt stop and do shopping on the way?)

He will be using the km method as his car is 10 year old so a logbook isnt the best option here.

And what happens to the car now it was been claimed some kms for business usage when sold? Is there is certain percentage he needs to pay for the business usage once its been sold?

Thanks many

Poll Options

  • 22
    1: he can claim the entire 20kms
  • 1
    2: he can only claim the one way trip of 10kms
  • 4
    3: no he cant claim anything
Education & Work

Comments

  • trex on 02/05/2021 - 22:16

    And what happens to the car now it was been claimed some kms for business usage when sold? Is there is certain percentage he needs to pay for the business usage once its been sold?

    No impact when sold. Kilometre method for business usage is to reimburse for fuel, running cost, depreciation etc when using a personal vehicle.

    • Aerith-Waifu on 02/05/2021 - 22:18

      Thanks, so provided no stop for other activities, he can claim the entire 20km return as long as no other activities are taken judging from the poll so far?

      • Frig on 02/05/2021 - 22:24
        +1

        He's conducting his business from home so that is the workplace. Any km travelled in the course of business (i.e. to client or post office etc and return) is claimable up to 5,000km pa.

        • Aerith-Waifu on 02/05/2021 - 22:29

          Thanks for that. If after he finishes the posting at the post office and decides to go to the Woolworths next door to the post office and get some milk.

          Can he still claim the entire 20kms or does he needs to now pro rata it? say 10kms for personal shopping for milk, and 10kms for postage?

          I am thinking as shopping for milk it will also take him 20kms return, which means by driving the entire 20kms he is now achieving 2 things, 1 is postage for business, second is shopping for milk. which shares a 50% usage on both? Or does it work very differently?

          • [Deactivated] on 02/05/2021 - 22:51
            +1

            @Aerith-Waifu: @Aerith-Waifu: I think you need to get to your motive instead of as they say beating around the bush.

          • trex on 02/05/2021 - 23:18
            +1

            @Aerith-Waifu: It depends on the nature of the personal stop. If the intention of the trip is to drop off the parcel and get some milk (no other closer locations to do so), then technically it would be 50%-50%.

            But if the intention is only to drop the parcel off and "hey since there's a Woolworth here, I can get some milk too", then the purpose of the trip is 100% business.

            Honestly, the tax man won't know you got some milk in that trip unless is a very clear detour to another location to do a personal chore. In which case just claim the most direct route without detour as 100% business.

  • Htu08 on 02/05/2021 - 22:49
    +1

    https://www.accountantsdaily.com.au/columns/12532-who-can-pr…

    I've noted that you have posted quite a few tax questions on a range of different scenarios so figured I should just highlight this.

  • spackbace on 02/05/2021 - 23:00
    +1

    Still waiting on closure on the Renault saga

    • Aerith-Waifu on 03/05/2021 - 03:55

      I got exactly 5% off in the end for the Renault with metallic paint. Couldn't get 1 cent more discount.

      • pegaxs on 03/05/2021 - 10:46

        They should be paying you to take a Renault off the lot. One of the 3 people this year that will buy one.

        • Aerith-Waifu on 03/05/2021 - 15:32

          You be surprised actually, its basically a Nissan Xtrail underneath, Nissian/Renault/Mitsubishi now sharing the same platform.

          At the final stages of negations the sales man even showed me how many they have sold since the 1st of April, it was 8 Koleos sold at this one dealership and I purchased around 20th of April. Not sure what you mean by only 3 people buying this year?

          • Chandler on 04/05/2021 - 12:49

            @Aerith-Waifu:

            At the final stages of negations the sales man even showed me how many they have sold since the 1st of April, it was 8 Koleos sold at this one dealership and I purchased around 20th of April. Not sure what you mean by only 3 people buying this year?

            Did he show you how much the other 8 had been sold for?

  • Findmebargain on 03/05/2021 - 09:53

    Interested to know OP’s view on logbook not being useful for a car over 10 years old.

    If you had a logbook maintained for a minimum 12 weeks period in the last 5 years, provided the use pattern hasn’t changed, you could claim per that predetermined business %. So, that particular trip might have just been an average trip over the year?

    • Aerith-Waifu on 03/05/2021 - 15:33

      Use pattern will change due to a seasonal business. So hence the best way going forward will be the KMs method.

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