Case Study | Plumber Saves $1,598 Tax

Objectives:  

Thomas is a plumber who wants to save tax so he can buy a new car.

Facts:   
 

• Thomas’s car was stolen 3 months ago and he is still waiting for an insurance payout.
• During this 3-month period Thomas borrowed his wife’s vehicle and travelled 5,000 work related km.
• Thomas’s wife also uses the vehicle for work purposes (average 5,000 km pa).

Accountant’s Advice: Tax Planning Strategy 5 | Jointly Owned Motor Vehicle

The ATO have confirmed that even when a vehicle is only registered in their spouses name a taxpayer is still considered to be the joint owner or lessee of the motor vehicle and eligible to claim expenses. This means where a husband and wife jointly own a motor vehicle and they both separately use that vehicle for an income producing purpose (work or a business), then each taxpayer will be entitled to claim a deduction using the cents per kilometre method (up to 5,000 work or business kilometres).

Results:

Thomas saves $1,598 tax (5,000 @ $0.68 = $3,400 @ 47%).