Let’s talk about which car tax benefit you can claim
Did you know that every employee is eligible to receive car tax benefits? The eligibility criteria for each benefit is assessed differently, and you’ll need to work out which one you qualify for.
Who can get it
If you use your car for work-related travel you will receive Car Tax Benefit A. If your car is used mainly for private use, then you can claim Car Tax Benefit B.
There is another option, of course, you may be claiming no benefit whatsoever. If you have a regular car loan, used your home loan redraw or paid cash for your current car you are probably missing out. Even if you already own a car, you can still access car tax benefits using Lendly Pay.
Car Tax Benefit A
If you own a car and use your car for work-related trips, you may be eligible to claim a deduction for your car expenses. Your deduction is limited to the work-related portion of your total car usage and doesn’t generally include travel between home and work because this travel is deemed private. To calculate your claim, you will need to keep a record of your actual car expenses and keep a logbook to separate personal use from work-related trips.
If you receive a car allowance from your employer for car expenses, it is assessable income, and the allowance must be included in your tax return. The amount of the allowance is usually shown on your income statement or payment summary.
With more than 140 employers using Lendly Pay, it’s never been easier to help your employees access Car Tax Benefit A.
Some of the benefits received by employees using Lendly Pay in FY20 include:
- An average income tax bill saving of $8,674
- No lost receipts or missed tax deductions
- No tax payable on the sale of cars – saving $1,000’s in tax payable resulting from a balancing adjustment.
A balancing adjustment is triggered when the car is sold for an amount greater than the written down value of the car. Any surplus is deemed assessable income and income tax becomes payable on the surplus.
Car Tax Benefit B
Even if you don’t use your car for work, you are still eligible to claim Car Tax Benefit B – but claiming this benefit can be complicated. That’s why we created Lendly Pay.
Lendly Pay is an employee benefits platform that is provided free to the employer. It allows employees to restructure their salary to reduce their taxable income. Employees pay for their car finance and running costs from their salary before their tax bill is calculated resulting in an increase in effective take-home salary.
With Lendly Pay, employees can budget for the following:
- Comprehensive Insurance
- Car Wash
- Roadside Assistance
In FY20, the average saving for employees using Lendly Pay to access Car Tax Benefit B was $4,412 or $367 per month.
Lendly is on a mission to give every Australian employee easy access to claim car tax benefits. Maybe you’re an employer wanting to offer your team Lendly Pay, or maybe you work for a company that doesn’t currently offer car tax benefits – let’s start a conversation.