loader image

Home > Blog > Changes to car allowances

Changes to car allowances

Date: 4 February 2016

Employers are reminded that if you pay staff a car allowance, you need to withhold tax on any amount you pay that is more than 66 cents per kilometre from July 1, 2015.

If you haven’t been doing this, it may be an idea to start now to avoid employees having a tax debt.

Even though the 66 cents amount was legislated in September 2015, the amount applies retrospectively from July 1, 2015.

Also consider pre-existing car allowance arrangements that have remained unchanged for this financial year. Employers should enquire with relevant employees whether they would prefer to increase the withholding amount for the remainder of the financial year to cover any possible shortfall.

Recap on car expense substantiation method changes

The government reduced the options for car expense deductions from July 1, 2015. Before this, there were four methods for calculating a deduction for work related vehicle use (cents per kilometre, log book, 12% of original value and one-third actual expenses methods).

From July last year, the government abolished the one-third of actual expenses method and 12% of original value method, leaving the cents per kilometre method (still with a 5,000km cap) and the logbook method (with unlimited kms).

There is no change to the principle that work related car expenses are deductible, and no impact on salary packaged cars.
Source: Taxpayers Australia.

Know More

Armidale Keynote Event – Leading on the Edge

Armidale Keynote Event – Leading on the Edge

Last week, we were proud to host the Leading on the Edge Keynote Event in Armidale as part of R+M’s 75‑year celebrations. Held at the Armidale Ex‑Services Memorial Club, the event brought together clients and business leaders from across the New England North West....

read more
Payday Super Reforms

Payday Super Reforms

Payday super reforms (Australia) commence 1 July 2026. Employers will need to pay Super Guarantee (SG) contributions at the same time as wages, rather than quarterly. What’s changing • Super must be paid on payday: employers must pay SG at the same time as wages...

read more
ATO New Guidelines for Charging Cost of Hybrid Vehicles

ATO New Guidelines for Charging Cost of Hybrid Vehicles

ATO NEW Guidelines for Charging Cost of Hybrid Vehicles An employer or employee may wish to calculate home charging cost of an electric car for reimbursement of these costs or providing an electric car to an employee. On 20 November 2025, the ATO updated Practical...

read more