How do I satisfy the requirement that an asset bought with the 50% tax allowance is used primarily for business?

I am a sole trader. How do I satisfy the greater than 50% primary business use requirement under the 50% investment allowance? Does driving from home to work classify as business use? Does driving from one office to another office count as business use? How much detail is required in the log book?

The ‘used primarily for business’ test is not fully explained in the legislation and it is generally viewed that it takes its ordinary meaning. This would require the vehicle to be used more than 50% for business purposes. Whilst the legislation does not specify that you maintain a logbook to prove this position, the onus of proof is on the tax payer, so a log book record would be the best form of evidence.

What constitutes business use is consistent with your eligibility to claim a tax deduction. Travel between home and work is considered to be private in nature and not for business. If you travel from home to a client and then on to your place of business that would constitute business travel.

As a sole trader, there are a number of options available to you as to how you claim your motor vehicle expenses. A claim using the ‘cents per kilometre’ method would not satisfy requirements to claim the investment allowance. Where there is any doubt about your eligibility, talk to your accountant and ensure that you have adequate evidence to substantiate that the vehicle is used primarily for business purposes.

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