It has recently been identified that there has been an increasing number of ATO audits focusing on car expense claims under the log book method in Division 28 (i.e., S.28-90 to S.28-155).
This method of claiming car expenses is often used for cars with a relatively high business use. This includes cars used by employee sales representatives/managers, marketing managers, IT consultants, real estate agents or consultants and individuals carrying on business (i.e., sole traders).
On this basis, it is expected that the ATO will heavily scrutinise car expense claims under the log book method for the 2023 income year, with a particular focus on identifying log book records that do not comply with the stringent log book requirements in Division 28.
Your claim for the 2023 income year must be based on a reasonable estimate of your car’s business kilometres. This must take into account a valid log book (noted above) and any changes in the way your car was used for both work/business and private purposes during the year.
You must also keep odometer records for the period during the 2023 income year that you held your car. These records must include your car’s odometer readings at the start and end of the period and your car’s make, model and registration number.
Should you have any queries in relation to the above, please feel free to contact our office.
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