What Is the ATO Travel Allowance per KM Rate for 2022-2023?

The Australian Taxation Office (ATO) allows you to claim the use of your car for work as a tax deduction. But are you aware of what the updated ATO travel allowance cents per KM 2023 is?

The rates are reviewed regularly and the ATO applied a new rate for the 2022 and 2023 tax years.

The rate for the financial tax year of 2022/23 is:

The ATO allows people to claim up to 5,000km using the cents per km method at the rate of 78 cents per km.

By reading this article, you will learn:

1. The cents per km method for claiming work-related vehicle use has a maximum 5,000km claim and $3,900 cap.
2. You can claim upto 1,200 km as regular visits to clients or customers under work-related vehicle use in 2023.
3. The logbook method allows unlimited driving kilometers for work purposes. No more than 8 passengers.

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What Are the Benefits of the Cents Per Km 2023 Method?

The cents per km method is the simplest way to claim your work-related vehicle use from the ATO. It saves you time because it doesn’t require detailed record keeping.

It also includes easy calculations to ascertain the claimable deduction amount. To calculate your deduction, simply multiply the number of total business kilometres by the price per km for the year.

However, one may only use this method if they are a sole trader or in a partnership where at least one of the partners is an individual.

Furthermore, they must be claiming deductions on a car which the ATO defines as motor vehicles, including 4-wheel drives that are specifically built to transport:

• A cargo weighing under one tonne.

What You Need to Know About the Cents per KM Method

• You can claim a maximum of 5,000 business kilometres annually.
• You can ONLY claim a maximum of $3,900 this year.
• Your claim is limited to a set rate, which is 78 cents per kilometre for the 2022/23 income year.
• You DO need to keep records to prove that you used your vehicle for work for the number of km claimed.
• You DON’T need to keep all the individual fuel receipts, insurance receipts, car servicing receipts etc.
• But, you can’t claim separate deductions for insurance premiums, depreciation and fuel etc.

The cents per km method is the simplest and easiest method for Australians who drive less than 5,000km of work travel per year.

You will need to keep the following records to substantiate your claim:

• Information on the distance covered for both work and personal purposes.
• Documentation for expenses related to fuel, oil, maintenance, services, and insurance.
• Documentation pertaining to loans or leases and tax invoices.
• Vehicle registration documents.
• Explanation of how you computed your deduction e.g., calendar or diary records.

What Are the Drawbacks of the Cents per KM Method

Though the cents per km method offers simplicity and time-saving benefits, it may not be beneficial for everyone.

If you travel extensively for work, you may find that you’re consistently driving more than 5000km annually.

Additionally, if your car incurs high expensive costs due to its make and model or type of fuel it uses, you might find that the actual vehicle expenses exceed what you can claim via the cents per km method. This is because you cannot claim expenses separately via this method.

Since the cents per km method offers a flat rate per km, it may not adequately cover the actual costs of running and maintaining your vehicle.

The table below showcases example work-related vehicle use in 2023 that you can include in your claim and the amount due based on the total kilometres driven.

To calculate the claimable amount, we need to multiply the total business kilometres by the current rate, which is 78 cents per kilometre.

So the claimable amount for the income year is 3,950 km x $0.78/km = $3,081.

Do You Want to Claim More Than 5,000km This Year? You Need the Logbook Method

If you are driving more than 5,000km per year for work purposes definitely check out the logbook method.

The ATO logbook method requires more record keeping BUT allows you to claim unlimited driving kilometres for work purposes. For example, if you drive 10,000 kilometres you could claim $5,760 or more. Check the calculations here.

You can claim more than the limited cents per km 2022 allowance, which is capped at $3,900 this year.

In fact, the easiest way to keep records and claim back tax money is with the GOFAR app. It costs a few dollars a month, and is tax-deductible.

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The following table compares the cents per km method to the logbook method.

Compare the top 5 best logbook apps to decide which one is most convenient for your needs.

Now that you’ve settled on the ATO logbook method, consider our selection of GOFAR subscriptions.

Interested? Learn more about how GOFAR can benefit you. Or get GOFAR today and start counting your tax-return blessings.

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