“We currently offer to reimburse staff for business use of their personal vehicle using the ATO cents per kilometre method. However, only a handful of employees submit requests in this way. Most claim it as a personal tax deduction when they do their tax. We would love to know, are we obligated to offer motor vehicle reimbursements? Or can we change our policy to request that all staff process motor vehicle reimbursements through their tax return?”
Before you make any changes to your company policies, you must first check your employee awards, enterprise agreements and employment contracts.
While many employers/business owners are not typically required to reimburse employees for motor vehicle expenses, an award, enterprise agreement or employment contract may state otherwise.
For example, clause 19.6 of the Clerks Private Sector Award 2020 (which covers clerical workers) provides that the employer must pay an employee required to use their private vehicle on the employer’s business at least $0.78 per kilometre travelled to a maximum of 400 kilometres per week. Of course, the employer may agree to pay for more kilometres if required/appropriate.
If there is an obligation to reimburse employees, as stated in an Award provision or similar, then you must offer this. Staff may still choose to claim the expense as a personal tax deduction.
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