Special substantiation and calculation rules for car expenses apply to an individual. Under these rules, motor vehicle expenses can be claimed using one of two methods where the expense is for a motor car, station wagon, panel van, utility truck or other road vehicle designed to carry a load of less than one tonne and fewer than nine passengers. For an explanation of these methods, see Work-related car expenses.
Do not include depreciation, finance leasing charges or interest paid. You should include these at Depreciation expenses, Lease expenses, Interest expenses within Australia or Interest expenses overseas.
Repairs and maintenance
This is expenditure shown in your accounts for repairs and maintenance of premises, plant, machinery, implements, utensils, rolling stock or articles associated with the production of income. Any non-deductible expenditure, such as items of a capital nature or amounts relating to private use of an item, included at this field, should also be included at Expenses reconciliation adjustments. The following information on deductions for repairs will assist you to work out whether you need to make an expense reconciliation adjustment.
Repairs
You may deduct the cost of repairs (not being expenditure of a capital nature) to premises and depreciating assets such as plant, machinery or equipment used solely for producing assessable income, or in carrying on a business for that purpose.
Expenditure on repairs to property used partially for business or income-producing purposes (for example, where the property is also used for private purposes or in the production of exempt income) is deductible only to the extent that is reasonable, taking account of such use. For example, if the asset was used 45% in the business, 40% for private use and 15% to produce exempt income, a reasonable deduction would be 45% of the expenditure.
Where items are newly acquired, including by way of a legacy or gift, the cost of repairs to defects in existence at the time of acquisition is generally of a capital nature.
Expenditure incurred in making alterations, additions or improvements is of a capital nature and is not deductible.
For more information on deductions for repairs, see Taxation Ruling TR 97/23 Income tax: deductions for repairs.
Records you need to keep
To support your claim for the cost of repairs, you must keep full details, including source documents, of the nature and cost of repairs to each item.
All other expenses
This is the total of all other expenses which you incurred in deriving your profit or loss and which you have not already shown elsewhere. Other expenses include wages, accounting and professional fees, advertising, office supplies, foreign exchange (forex) losses and any loss on the sale of a depreciating asset as shown in your accounts.
You should also include gifts and donations that are a business expense and amounts you pay professionals in managing the tax affairs of the business at this section. You should not claim these amounts at Gifts or donations or Cost of managing tax affairs on your tax return.
For information about forex losses, go to ato.gov.au or see Other deductions.
You should also include capital and other non-deductible items (including debt deductions denied by thin capitalisation rules) shown here at Expense reconciliation adjustments.
See also:
Home office expenses
If part of your home was specifically set aside as your place of business and used solely for the purpose of conducting your business affairs and you had no other place from where they were mainly carried on, the following expenses are partly deductible:
- occupancy expenses, including rent, mortgage interest, rates, and house and contents insurance
- running expenses, including electricity, cleaning, depreciation, leasing charges and repairs to furniture and furnishings in the office.
In most cases, you can apportion expenses on a floor area basis and, if the area of your home was a place of business for only part of the year, on a time basis.
Where you used part of your home as a home office but it did not qualify as a place of business, only the additional running expenses you incurred may be deductible.
See also:
- Taxation Ruling TR 93/30 Income tax: deductions for home office expenses
- Law Administration Practice Statement PS LA 2001/6 Home office and electronic device expenses.
Records you need to keep
You should keep records to show how you have calculated your home office expenses. We may ask you for these at a later date.