If you’re planning to splash out and buy the car of the dreams you want to do it the smartest way possible, says medical accountant Kym Nitschke.
Are you a self-employed doctor who owns a car?
Do you use this car for business purposes?
If you answered yes to both of these questions, you have one more consideration; are you taking full advantage of motor vehicle tax benefits?
For most doctors, you can most likely claim some costs back on your tax. But what about that more expensive, luxury car that you’ve had your eye on? Given how much tax you pay, and how much the car will likely cost you, you’ll want to find any opportunity to reduce your tax. Or maybe you’re just looking for a way to justify the purchase …
Here’s a few key points.
How much can you claim for the car’s value?
Under the instant asset write-off scheme and the temporary full expenses scheme, you can claim up to $59,136 of the car’s value (excluding GST) — irrespective of what car you own.
However, you do have to prove the car was used for work purposes; otherwise, you won’t see a cent deducted.
Keep your logbook updated
A logbook is essentially your proof to back up your claims that you are using your vehicle for work purposes, should the Australian Tax Office (ATO) knock on your door.
If you calculate expenses through the cents per kilometre method, it’s worth working out the distance travelled to figure out a truthful average.
While you can’t claim for driving from home to work and back, there are many cases where you can claim.
Travelling between different places of work
Driving to and from training and education courses
Visiting patients on house calls or medical facilities
It’s vital to keep this document updated as an incomplete logbook could jeopardise your position.
You should certainly get advice from your medical accountant about the best way to approach this.
How locum doctors can claim
Locum doctors often have to travel long distances for work. For example, they could be filling in for a general practitioner out of town or bouncing between suburbs covering various shifts.
For the most part, claiming this type of travel is accepted by the ATO if the journey is between two places of work. However, they won’t accept travel expenses if the trip is between home and work.
There are a number of tax complexities for locum doctors so it is crucial for doctors to seek expert advice.
Tax can be tricky, talk to a trusted professional
There are tax opportunities available for doctors when purchasing and using a car. But it is important to get advice from a medical accountant who understands the unique needs and circumstances for medical professionals. We can help you with your specific motor vehicle need, and your broader tax strategy. Contact us.
The information contained on this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on Nitschke Nancarrow’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
Nitschke Nancarrow specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.