Claiming car use during buying & reno

[Burramys]

The ATO advise that when recording car use, Method one
http://www.ato.gov.au/Business/Dedu...our-deduction/Method-1---cents-per-kilometre/
"You do not need written evidence to show how many kilometres you have travelled, but we may ask you to show how you worked out your business kilometres."

Method four says to include the dates, start and finish odometer, distance for work, and a few other things.
http://www.ato.gov.au/Business/Dedu...alculating-your-deduction/Method-4---logbook/
It seems to me that implicit in Method one is having the detail cited in Method four.

A property is being renovated. There was one journey before the auction to inspect the property, another to be at the auction, and rather more journeys than I would have liked to sort out tradies. There will be more journeys during the reno. It appears that the first journey may not be an allowed deduction, and that the rest are allowed, added to the cost base.

The way I have been recording these journeys is in line with Method four. Then add up the property-related totals, multiply by 76 cents (the FY14 rate for medium cars) and add to the cost base. I was advised that it is not necessary to record odometer readings.

Long preamble, short question: am I recording the journeys correctly, and are odo readings necessary? TIA.

 

[A Jeremy]

The ATO or your accountant are the sources of information you're probably going to want to rely on for this one.

 

[Burramys]

Agreed. However, the ATO website is unclear, and accountants cost. The ATO charter says that taxpayers can rely on their advice, but what if the advice is unclear? It's getting a bit late in the year for a private ruling.

 

[DaveM]

My understanding is that travel costs prior to aquisition are not deductible. But travel costs after settlement to inspect or perform maintenance/repairs are. If its a small number, then the per km method is probably easiest.

 

[Paul@PFI]

Renovation after acquisition is a capital cost. Pre-purchase is neither deductible or capital expense. Its blackhole "nothing".

Recording the odometer reading is far less likely to be challenged that not doing it. Same with dates....ie the "diary method" is OK. While the cents per km method doesnt have an onus on "proof" a reasonable basis needs to be demonstrated.. eg dates you travelled, etc. A diary etc may be sufficient too especially if you hold recepits etc dated for the days involved. Just be able to satisfy an enquiry.

 

[Burramys]

Renovation after acquisition is a capital cost. Pre-purchase is neither deductible or capital expense. Its blackhole "nothing".

Blackhole - I like it.

Recording the odometer reading is far less likely to be challenged that not doing it. Same with dates....ie the "diary method" is OK. While the cents per km method doesnt have an onus on "proof" a reasonable basis needs to be demonstrated.. eg dates you travelled, etc. A diary etc may be sufficient too especially if you hold recepits etc dated for the days involved. Just be able to satisfy an enquiry.

Blast, I knew that, but as I have always complied (over-complied in most cases) for ages it had slipped off my radar. You have identified what seems to me to the key point: being able to prove that something is so. My bound ruled diary - just a book with lines - has long recorded contemporaneous events for use later. It's very hard to challenge a book with ink entries.

One person suggested using the RACV rate. I said to follow ATO advice, but no, this person says RACV rates apply. Not this little black duck.

Many thanks to all - most helpful.