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Posted: 2016-04-15 12:00:00

Some claims for work-related car expenses will be reduced this year.

MOTORISTS have been accelerating their efforts to grab a bigger tax refund, increasing their deduction claims for car expenses almost 30 per cent in just five years.

But tax deductions rule changes to be introduced this year mean that many will face a cut to what they can claim.

New Australian Taxation Office data shows more than 3.2 million individuals claimed almost $8.6 billion of work-related car expenses for the 2014 financial year, up from $6.66 billion in 2009.

H & R Block director of tax communications Mark Chapman said the rise in deductions reflected changing work patterns.

“These days people are a lot more mobile in the way they work,” he said. “The days of going to an office and working nine to five sitting at a desk are largely gone.”

The ATO has scrapped two of the four methods it allowed for claiming work-related vehicle deductions, leaving only the simple cents per kilometre calculation and the comprehensive logbook approach.

H & R Block director of tax communications Mark Chapman.

H & R Block director of tax communications Mark Chapman.Source:Supplied

It has also reduced the cents per kilometre rate to 66c for all cars. Previously people with engines larger than 1.6 litres could claim 76c or 77c per kilometre.

An ATO spokesman said the changes were part of the 2014-15 Federal Budget.

“Taxpayers need to be aware of these changes as it may affect how they claim for their car expenses,” he said.

“For example, it may be of greater benefit to claim under the logbook method than the cents per kilometre method, which is limited to a claim for 5000km of travel.”

Mr Chapman said the change in the cents per kilometre allowance would hit the many motorists with larger cars, and their only alternative now was to use the logbook method.

“The logbook is quite arduous, which is why it’s good you only have to keep it for 12 weeks once every five years.”

The end of financial year is approaching quickly, so now is the time to act.

“If you want an easy life the thing to do is to claim the cents per kilometre, but you can only do it if you claim up to 5000km,” Mr Chapman said.

“However, if you have more than one vehicle you can claim that 5000km per vehicle.

“It can be a pain to keep a logbook but it does generally pay off in the long run. If using the logbook method you can claim depreciation.”

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