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Claiming a deduction for car expenses - award transport payments

What are award transport payments?

Award transport payments are the allowances that cover either car expense reimbursements or transport expenses. These are paid in accordance with an industrial law that has been in force since 29th October 1986. The calculation for the car expense reimbursement is done according to the number of kilometers traveled.

All amendments that were subsequently made to the industrial award or law after 29th October 1986 are considered made on that day itself

Award transport payments come under assessable income and payments have to be included as income when filing tax returns. If you have been covered by any car or transport expenses, you can then claim a deduction for car expenses as well as for transport expenses.

You will not need any written evidence if your work-related car or transport expenses claim is less than the amount awarded. If there is a claim made by you for any extra kilometers that the award transport payment does not cover, you will have to employ the 'logbook' method with written proof to make a claim on return of tax. Alternatively you could also use the 'cents per kilometer' method.

However you should remember that kilometers claimed on your return of taxes and covered by the award transport payment are counted as one part of the total number of kilometers you've traveled as per the 'logbook' method. These will not be considered business kilometers under the 'logbook method' nor the 'cents per kilometer' method. Make an estimate that is reasonable if you are not sure how to calculate the number of business kilometers that are related to your payment.

You could also choose the option of not limiting any part of your claim for car expenses that are work-related towards the award amount. In that case, your claim should be made on your tax return. Car expenses that are covered by the award transport payment should not be claimed. Your tax return claim should be made using any one of the four accepted methods for calculating car expenses. If the award transport payments covers any kilometers that are work-related consider them as business kilometers. However written evidence is needed to be provided by you for the selected method.

Example

22,000 kilometers were traveled by Emma during the year 2005- 2006. 50% were work-related. An award transport payment totaling $2,000 was received by her for a total of 5,000 kilometers that were work-related. There were 6,000 business kilometers that the payment did not cover.

Emma needs to show the amount of $2,000 when claiming a tax return. There are different ways she can do this:

  • She can make a claim for $1,400
  • She can make a claim for $1,400. From her extra 6,000 business kilometers she can use 5,000 towards claiming total car expenses using the method of 'cents per kilometer'.
  • She can use written proof of her expenses to claim $1,400 after which she can use the 'logbook method' to claim the remaining 6,000 business kilometers. The 6,000 business kilometers are divided by the 22,000 work related kilometers to ascertain her percentage of business use.