When NRL legend Petero Civoniceva made his first grade debut for the Brisbane Broncos in April 1998, the nickname that he got from his teammates was “Petrol 70c a Letre” because that was the price of petrol back then.

At the same time the amount that you could claim for work-related motor vehicle expenses in your income tax return for a large car (engine size over 2600cc) under the cents per kilometre method was 59.5 cents per kilometre.

Fast forward to 2011 and, depending on where your pump is located, we have seen the price of petrol double to $1.40 on the back of rising oil prices over the past decade.  At the same time, the amount that you can claim in your tax return for your large car is 75 cents per kilometre, or just 26% higher.

Admittedly, the ATO’s cents per kilometre method factors in wear and tear (that is, depreciation) on your car as well as other running costs such as insurance, registration, repairs, servicing, tyres, batteries and the like.  But let’s face it, these expenses (as well as the cost of cars) have gone up as well since 1998.  Have you ever seen your insurance company reduce the cost of your premium from the previous year?  I know that I haven’t.

According to quarterly CPI figures, inflation has risen by over 47% since Petero made his debut against Norths on 26 April 1998. The CPI index factor for the June 1998 quarter was 121.0.  By June 2011, the factor had jumped to 178.3. 

If you were to take the AWOTE figures then we have seen a jump from $727.20 in average weekly ordinary times earnings to $1,288.10.  Or a 77% increase since Petero’s debut.  (On a separate note, have rugby league player wages risen by that much post-Super League?)

Based on this it would be safe to assume that the cost of running a car (excluding petrol) has jumped in line with the CPI increase of 47%.  When you factor in petrol, the cost of running a car has definitely risen by more than 50%.  So why do taxpayers only get an increase in the cents per kilometre method by only half this amount?  If defies logic!

We have also seen in the latest carbon tax debate, that the big dent in most family budgets is the cost of electricity.  I haven’t bothered trying to find out the prices back in April 1998 to compare them to now, but it is safe to say that they have easily doubled in that time, maybe even tripled depending on what talkback radio station you listen to!

Yet the poor schoolteacher who has to mark subject’s homework and exams or the sales representative who does all of his “off-road” work at home, they can only claim 34 cents per hour for their heating, cooling, lighting and furniture depreciation.  Yes it is an increase on the 26 cents per hour that was constant for many years, but again nowhere near the actual rise in energy costs that families have had to endure.   

(Hint: If you want to work out your tax deduction, here is a home office expenses calculator to help with your claim).

It is no wonder that working families are struggling.  It is clear that if you want to maximise your refund then make sure that you keep a log book of your actual work-related car travel and home office usage.  Also make sure that you keep all receipts in relation to the running costs of both. 

Oh, and for goodness sake, can someone please tell the taxman what the price of petrol and electricity is these days!

PS Could someone tell me how much their electricity has risen by since April 1998?

Adrian Raftery, aka Mr Taxman, is the author of 101 Ways to Save Money on Your Tax – Legally!