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ATO Mileage Reimbursement Rate for 2021/2022

The ATO mileage rates play a vital role in calculating your mileage reimbursement. Despite the new financial year, the ATO has maintained the mileage rate for this year, keeping it consistent with the previous year.

The Current ATO Mileage Rate 2021

Starting from the 2021 financial year, the ATO has set the mileage rate at $0.72 per kilometer for cars, excluding motorcycles or vehicles with a carrying capacity of one tonne or more, or vehicles with nine or more passengers, such as utility trucks or panel vans, used for business purposes. This rate applies whether you are a sole trader claiming mileage or an employee being reimbursed by your employer.

As an employee, your employer has the choice to reimburse you for the expenses incurred when using your vehicle for business. While your employer sets the rate and rules for reimbursement, the ATO mileage rate serves as the standard. It is worth noting that any payments made to you above the ATO mileage rate or any car allowances provided are considered taxable income.

If you are self-employed, you have the option to use the ATO mileage rate to deduct the costs associated with using your car for business purposes.

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Alternatives to the Cents Per KM Reimbursement Rate 2021

As a self-employed entrepreneur or business owner, you have the flexibility to calculate your vehicle’s operating costs for business using either a logbook or the actual costs method if your business is a company or trust. Instead of relying on the ATO mileage rate for 2021, you can choose to utilize the actual costs method.

For employees, it’s important to note that the standard cents per km rates are optional. Your employer may choose to use the ATO mileage rate or an alternative method. Therefore, it is advisable to check with your employer regarding the rates and rules in place before calculating reimbursements when using the cents per km method. To learn more about mileage reimbursement for employees, refer to our helpful guide.

FAQs

Q: What is the ATO mileage rate for 2021/2022?
A: The ATO mileage rate for cars used for business purposes remains at $0.72 per kilometer driven.

Q: Can my employer reimburse me at a rate higher than the ATO mileage rate?
A: Yes, your employer can choose to reimburse you at a rate higher than the ATO mileage rate. However, any payments above the ATO mileage rate or car allowances provided are considered taxable income.

Q: Can I use the ATO mileage rate as a self-employed individual?
A: Yes, if you are self-employed, you have the option to use the ATO mileage rate to deduct the costs associated with using your car for business purposes.

Conclusion

Understanding the ATO mileage rates is essential for accurate mileage reimbursement calculations. With the current rate set at $0.72 per kilometer driven for business purposes, it is important for individuals and employers to comply with these standards. Whether you are a sole trader, an employee seeking reimbursement, or a self-employed entrepreneur, familiarizing yourself with the ATO mileage rates ensures proper compliance and fair reimbursement. For more information on the ATO and their services, visit iBlog.

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