If you are using your car for work, you may be missing out on valuable tax deductions. Medical professionals tend to always be on the go. Because of this, you could be eligible to claim tax deductions relating to your travel. This could mean considerable savings on your tax returns. So don’t miss out – check out our tips below on what you could be claiming.

What is eligible travel?

Eligible work-related travel includes travel between two places of work (e.g. the clinic to the hospital), visiting patients outside the clinic and delivering/collecting medical items or supplies. Under specific circumstances, trips from home may also be eligible, including:

  • Seeing patients at your home surgery;
  • Carrying large/bulky items to work such as patient files or medical supplies; or
  • Providing immediate treatment instructions while on call before heading to the job.

What can’t be claimed?

Be aware though that you can’t claim a deduction if:

  • The expense was reimbursed by your employer
  • The expenses are private in nature (e.g. normal home to work travel)
  • You do minor tasks on the way to work (like picking up mail) or just because there is no available public transport
  • The expenses are incurred for both private and work purposes as you can only claim the work related portion.

Calculating the claim

The Government recently reduced the ways to calculate deductions, applicable from 1 July 2015. There are now two methods available: cents-per-kilometre or logbook. These are applicable whether the car is owned outright or under a financing arrangement, as long as you are the owner or lessee.

Cents-Per-Kilometre

The cents-per-kilometre method is the simplest method. It requires a reasonable estimate of the number of work-related kilometres travelled, up to a maximum of 5,000 km. A flat rate of 66 cents per kilometre is applied, resulting in a tax deduction of up to $3,300. Substantiation required for this method is minimal, however should the ATO query this, you will need to be able to justify the kilometres driven and show that it is reasonably estimated.

Logbook

Alternatively, the logbook method can be used. It requires more work but may result in a higher tax deduction. A logbook will need to be kept in the first year for a minimum continuous 12 week period, recording odometer readings after each trip and noting whether it was work-related or private. The logbook should be representative of your travel throughout the year. It also needs to be redone every 5 years, or where the use of the car changes substantially. Additionally, opening and closing odometer readings need to be recorded for each financial year you apply this method.

The work-related percentage, as determined from the logbook, is then applied to eligible car expenses to calculate the tax deduction. Eligible expenses include fuel, oil, services, registration, loan interest, insurance and depreciation. Expenses that can’t be claimed under this method include the cost of the car, fines, the principal repayments on any loans or any improvement costs. The expenses claimed need to be substantiated, so remember to keep all your receipts (we recommend keeping these for five years from the date you lodge your tax return).

Want to know more?

It can be difficult to determine if you’re entitled to a tax deduction based on your specific travel habits, or what method of claim is most suited to you. However getting the right information could give you considerable tax savings, so it may be worth talking to a tax expert. If you have any questions or would like to discuss your current situation, feel free to Kristy Baxter or Angela Stavropoulos from Pilot’s Medical Services division on (07) 3023 1300.