ATO tax deductions missed and costing Australians refund windfalls

Apr 05, 2021

Billions of dollars in tax deductions are likely to be missed this year as employees, sole traders and other business owners fail to claim enough work-related kilometres they drive.

Taxpayers are avoiding motor vehicle logbooks and instead opting for simpler tax deduction methods allowed by the Australian Taxation Office, but accountants warn this practice potentially halves their deductions.

Logbooks only need to be filled out for 12 weeks once every five financial years unless circumstances change, and April 7 is exactly 12 weeks before June 30.

Mileage tracking company GoFar has examined work-related travel data from the ATO, Bureau of Statistics and industry reports and estimates up to $9 billion is under-claimed annually.

“People don’t bother with logbooks because they are busy and recording kilometres is a time sink,” GoFar CEO Danny Adams said.

“The main under-claim is probably the 720,000 Aussies who claim exactly 5000 kilometres,” he said.

“If you claim 5000km or less you don’t need to keep a logbook so it’s much easier. While a few of these may actually be driving exactly 5000km – and some may even be padding the claim – most are knowingly deciding to miss out in order to reduce the burden of paperwork.”

The ATO increased its cents per kilometre rate from 68c to 72c this financial year, and its 5000km limit equates to a maximum $3600 deduction. However, couriers, drivers and others often spend much more fuel, repairs, insurance, registration, depreciation, loan interest and lease payments.

Kelly+Partners CEO Brett Kelly said many Australians did not know the tax benefits that could come from completing a log book.

“The effort is worth it, so start counting work trips,” he said.

Mr Kelly said people could not claim the cost of commuting to and from their regular workplace, but other business-related trips could be claimed if a work purpose and other details were logged.

“If you started to use your car for business-related purposes less than 12 weeks before the end of the income year, you can continue to keep a logbook into the next year so it covers the required 12 continuous weeks, starting this year from April 7,” he said.

Chartered accountant and Mr Taxman founder Adrian Raftery said in his experience clients who had not used logbooks missed out on claiming double their allowable deductions.

“My estimate is there’s 10 or 15 per cent (of taxpayers) who should do a logbook but don’t,” he said.

Dr Raftery said the ATO was monitoring motor vehicle claims by comparing people’s deductions and occupations with those in similar occupations.

“If their claim is a lot more than average, they are more likely to be audited,” he said.


The Australian Taxation Office says people cannot claim for trips between work and home, but can claim for:

• Performing work duties

• Attending work-related meetings and conferences

• Travelling between two places of employment if neither is their home

• Travelling from home to an alternative workplace then to their normal workplace

• Travelling between shifting places of employment, such as multiple sites daily

Source: ATO


Original article published in The Australian here on 5 April 2021.


comments-rhsLatest Comments

  • "Breakup and Come Back To Me Spell:-Have you lost your lover to another person and they are happy in the arms of another person but you still love them and want them back then you need to Breakup and..."

    By: HOW TO GET BACK YOUR EX at May 09, 2021 1:16PM

    Post: Marriage

  • "Old thread, but have a related question... If I have a "Foreign LLC" registered in the US and am trading Futures on US exchanges using a US FCM/broker (but am an Australian resident for tax..."

    By: CJ at Apr 06, 2021 6:46AM

    Post: Trading US futures in Australia

  • "Hi. I bought shares back in 2018.. And a few more since. I borrowed the money out of my home loan to do this. I still own the shares, but do not receive any dividends from them, although the value..."

    By: Harry at Mar 31, 2021 3:38AM

    Post: Borrowing to buy shares

  • "Hi Mr Taxman, this is a great forum, thanks. I am trading forex and commodities on an Asian platform. Whn I went to withdraw funds I was informed that the Australian Tax department requires me to pay..."

    By: Peter Andrew Sutherland at Mar 26, 2021 10:41PM

    Post: Foreign currency trading

  • "Im planning on hiring a Nanny to drive my child to my ex husband and back twice a fortnight adding up to approximately 6,000km a year. What will they be eligible to claim and what kinds of records..."

    By: Peta Granger at Feb 25, 2021 3:52AM

    Post: Claiming car expenses