In good company.
As we look back on the past year, we’re reminded that our greatest strength lies in the people we work alongside. This edition is especially meaningful as we celebrate the remarkable career of Geoff Johnson, who recently retired after years of dedicated service and unwavering commitment to our clients and team. Geoff’s wisdom, generosity, and good humour have left a lasting mark on RCR, and we wish him all the very best in this next chapter.
We’re also shining the spotlight on one of our valued clients, Barbara Pesel, and sharing key tax insights to help you stay ahead. From understanding whether your car is eligible for deductions to navigating the new rules around ATO interest charges, we’ve got practical advice to support your financial decisions.
Is your car eligible to be tax-free? Understanding vehicle deductions for business use.
For many business owners and sole traders, a car is more than just a way to get from A to B, it’s a vital tool for running and growing your business. But when it comes to claiming vehicle expenses, the big question is: can your car be tax-free?
The short answer? Not quite — but you can claim deductions.
Under Australian tax law, no car is truly “tax-free.” However, if your vehicle is used for business purposes, you may be eligible to claim deductions for running costs or even depreciation, which can significantly reduce your taxable income.
What makes a car eligible?
To claim car expenses, the vehicle must be used in the course of earning your assessable income. This includes:
- Visiting clients or job sites
- Attending business meetings or events
- Travelling between different workplaces (not commuting from home to your regular workplace)
You’ll also need to prove that the use was business-related, meaning you need to document accurate records.
Methods for claiming
There are two main methods to claim car expenses:
- Cents per kilometre method
You can claim up to 5,000 business kilometres per car, per year at a set rate (currently 85 cents/km for the 2024–25 financial year). No logbook is required, but you’ll need to be able to show how you calculated your work-related travel. - Logbook method
This method lets you claim a percentage of your total car expenses (fuel, servicing, insurance, registration, depreciation, etc.) based on business use. You’ll need to keep a logbook for 12 continuous weeks, and the percentage can be used for five years (unless your usage changes significantly).
What about GST and depreciation?
If your business is registered for GST, you may be able to claim the GST credit for the business portion of your vehicle purchase or running costs
Small businesses can claim depreciation up to the depreciation threshold (currently $69,674 for 2024–25).
If you’re wondering whether your car can be “tax-free,” the real question is whether it qualifies for deductions under ATO rules. The good news is, with the right structure, documentation, and advice, you can make the most of your vehicle’s business use and reduce your tax bill.
ATO interest is no longer tax deductible. Here’s what to do if you still owe tax.
As of 1 July 2025, the ATO has announced a change that you might not be aware of, and it could cost you more if you’re carrying a tax debt: you can no longer claim the interest the ATO charges you as a deduction.
Now if you have an unpaid tax bill, it gets more expensive every day and you can’t deduct that cost at tax time. Previously, if the ATO charged you interest on a late payment or underpayment (known as General Interest Charge (GIC) or Shortfall Interest Charge (SIC), you could claim that as a deduction on your tax return.
From 1 July 2025 onwards, those interest charges are no longer tax deductible, no matter when the original tax debt began.
The ATO interest rate is currently sitting at 11.17% p.a.
Without the deduction, the real cost of carrying tax debt has gone up, especially for small businesses or individuals juggling cash flow.
If this sounds like your situation, here’s what we suggest as your next steps:
- Check your current ATO balance
Log in to your ATO account (via myGov or the business portal) and check if any interest is accruing on your account. - If you can pay it off, do it sooner rather than later
Even partial payments can reduce the interest building up. - Explore your options
You could consider a commercial loan or overdraft as interest on those can still be deductible if the funds are used to generate income. - Reach out to us
We can walk you through your options and help you figure out the most cost-effective way to manage your position going forward.
New Tax Practitioners Board requirements
As per previous correspondences, we have now fully implemented Ignition, our new engagement process software which complies with the new TASA changes required from the Tax Practitioners Board.
Just a reminder if you receive any emails from Ignition that it is from our firm.
Our clients, their stories: Barbara Pesel
We’re shining a light on the people and partnerships that help shape success. Meet Barbara Pesel, Managing Director of Pesel & Carr, a leader in strategic communications.
At Pesel & Carr, the mission is simple: to help organisations communicate with clarity, confidence and purpose, particularly during times of change, complexity or risk. With more than 25 years of experience, the agency specialises in strategic communications, including reputation management, issues and crisis support, and marketing strategies that build brand awareness and foster community engagement.
As a consultancy built on navigating complexity, Pesel & Carr understands the importance of surrounding themselves with partners who bring both expertise and integrity, and that’s exactly what they were looking for when they first engaged RCR’s Pat Rocca.
“We’ve worked with Pat for many years now, across both our business and personal finances,” Barbara explains. “From the beginning, we weren’t just looking for technical skills. We needed someone we could rely on, someone who understood the nuances of a consultancy and could offer sound guidance at every stage of growth.”
“Pat brings that rare combination of insight and integrity. He listens, asks the right questions, and genuinely cares about where we’re headed, not just as a business, but as people.”
That care and attentiveness has made a lasting impression. Whether it’s day-to-day decisions or big-picture planning, the relationship has remained consistently positive and purposeful. “Pat’s calm, considered approach, and the way he really takes the time to understand how we work, makes his advice all the more impactful.”
The value of that partnership became particularly clear during the uncertainty of COVID-19. As businesses scrambled to respond to evolving regulations and shifting financial forecasts, Pat’s guidance proved indispensable.
“He helped us navigate the complexities of government stimulus packages, adjust our forecasting, and make confident, proactive decisions during a really difficult time. It reinforced just how vital it is to have someone like Pat by your side – someone you trust, who brings both expertise and empathy to the table.”
For Pesel & Carr, working with RCR has never just been about numbers. It’s about values, alignment, and a shared commitment to doing things the right way. “In Pat, we found a true partner – one who not only understands where we’re going but genuinely wants to help us get there.”
