Motorists who use their own cars for work will lose about $85 a year in tax claims when the Australian Taxation Office updates its mileage rates from July 1.
Under a Budget measure set to save $845 million over the next four years, workers who drive less than 5000km will no longer claim per-kilometre rates depending on the size of their car engine.
At the moment, about four million Australians who claim work-related car expenses in their annual tax return claim 65¢ a km in petrol and running costs for a small car, and 76¢ and 77¢ respectively for medium and large cars.
But one flat rate of 66¢ will come into effect on July 1, delivering a boost to those who drive small cars, but stinging those with larger models.
Those who believe their costs are higher, or who drive more than 5000km a year for work, will be able to claim the former rates, but only if they keep a detailed logbook.
Assistant Treasurer Josh Frydenberg said the average running cost for the top five selling vehicles was 66¢ a kilometre.
Average impact for those driving larger cars would be a loss of $85 a year
"There is a need to modernise the methods of calculating tax deductions to reflect the costs of running a motor vehicle," he said.
"Given it is now nearly 30 years since the methodology was introduced and, with developments in car engine technology, it is time to update these rates." He said the average impact for those driving larger cars would be a loss of $85 a year. Two other methods used to calculate car expenses would be discontinued.
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