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  • Claiming a deduction for car expenses – award transport payments

    Award transport payments are allowances covering either transport expenses or car-expense reimbursements that are paid under an industrial law or award that was in force on 29 October 1986. The car-expense reimbursement is calculated in respect of a certain number of kilometres.

    Your union or employer can tell you how much the amount was as at 29 October 1986 - that is, the award amount.

    Award transport payments are assessable income and you must include any payments as income on your tax return. If you have incurred:

    • transport expenses covered by these payments, you claim a deduction at item D2
    • car expenses covered by these payments, you claim your deduction at either item D1 or item D2.

    If your claim for work-related transport or car expenses is no more than the award amount, make the claim at item D2 on your tax return. You do not need written evidence.

    If you also have a claim for any additional kilometres not covered by the award transport payment, you can make the claim at item D1 on your tax return but you can only use either the:

    • logbook method (you will need written evidence)
    • cents per kilometre method.

    Claiming at item D2

    If you are claiming no more than the award amount for transport expenses, make the claim at item D2 (you do not need written evidence).

    For your work-related car expenses claim, kilometres that are covered by the award transport payment and claimed at item D2 on your tax return are not counted as business kilometres under either the 'cents per kilometre' or 'logbook' method. However, they are counted as part of the total kilometres travelled for the 'logbook' method. If you do not know how many business kilometres relate to your award transport payment, you can make a reasonable estimate.

    Claiming at item D1

    Alternatively, you may choose not to limit any part of your claim for work-related car expenses to the award amount. If this is the case, make your claim at item D1 on your tax return (and do not claim car expenses covered by your award transport payment at item D2). When making your claim at item D1 on your tax return you can use either of the two methods to calculate your car expenses. Treat any work-related kilometres covered by the award transport payment as business kilometres. You will need to provide the written evidence required by the particular method you select.

    Different ways you can claim

    The example below explains the different ways you can claim when you receive an award transport payment.

    Example

    Emma travelled 22,000 kilometres in total during 2016-17. Half of these were work-related. She received an award transport payment of $2,000 which, under her award, covered travel of 5,000 work-related kilometres. This left her with 6,000 business kilometres not covered by the payment. The '29 October 1986' award transport payment was $1,400.

    Emma has to show the $2,000 as income at item 2 on her tax return. She can claim her car expenses in one of the following ways:

    • She can claim $1,400 at item D2
    • She can claim $1,400 at item D2 and then use 5,000 of her additional 6,000 business kilometres towards a claim for total car expenses at item D1 using the ‘cents per kilometre’ method
    • If she has written evidence of her expenses, she can claim $1,400 at item D2 and then use all the outstanding 6,000 business kilometres towards a claim for total car expenses using the 'logbook' method. She divides her 6,000 business kilometres by her 22,000 total kilometres to work out her business use percentage
    • She does not claim the $1,400 at item D2. If she has written evidence of her expenses, she can treat the kilometres covered by the award transport payment as business kilometres, and claim them as work-related car expenses at item D1. This gives her a total of 11,000 business kilometres towards a claim for total car expenses using the 'logbook' method. She divides her 11,000 business kilometres by her 22,000 total kilometres to work out her business use percentage
    End of example

    See also:

    If you need help applying this information to your own situation, phone us on 13 28 61.

      Last modified: 29 Jun 2017QC 16994