Do you ride your bicycle to work or client meetings? If so, you may have wondered whether you can claim a tax deduction for it and thus help you justify the purchase of those new Zipp wheels which you simply must have for commuting. In this post we take a quick look at how the deduction rules apply to the humble bicycle.
First things first, we need to understand that the tax laws do not consider a bicycle to be a car for the purposes of claiming a tax deduction. This is important because it means that anything you hear about using a 'cents per kilometre' method is nonsense.
As you can see from the legislation below, our daily reality here in the Matrix is reflected in the law - a bicycle is not a car.
"car" means a *motor vehicle (except a motor cycle or similar vehicle) designed to carry a load of less than 1 tonne and fewer than 9 passengers, and "motor vehicle" means any motor-powered road vehicle (including a 4 wheel drive vehicle).
Now that we've got that all cleared up, we're still left with the question, can I claim a tax deduction for my bicycle?
There are generally two ways you could claim the cost of your personal bicycle:
- You could claim it as a work-related expense if you bought the bicycle specifically for work. You might have a job outdoors that requires you to get around and a bicycle is the best way to do it. Assuming your employer hasn't provided one, then a bicycle could be a great tool to get the job done. There was a private ruling issued where a teacher required one to deliver rider training to school kids and the cost of this bike (left at work) was held to be deductible as a work-related expense. Makes sense.
- Or you could claim it as a travel expenses. This could work if you were using the bike to get between jobs or visiting clients. The idea here is that you're doing it rather than catching a taxi or some other form of public transport for travel that is deductible under the usual travel deduction rules.
Regardless of the method you will need to make an apportionment for any private usage (e.g. riding to/from work or competing in a crit race on a Thursday night). A basic log book would help here to prove what the private vs business use was.
As for what costs can be included, it works like any other deduction. The cost of the bike may need to be depreciated over it's useful life meaning you can't claim it all in one hit. Then you'll have the running costs (e.g. tyres, servicing, etc.) which could be claimed as they are incurred.
Just like the rest of the Australian tax system, claiming a deduction for the costs associated with your bicycle is delightfully confusing. If you need help untangling your tax, why not drop us a line? We'd love to help.