In this investigation, we are going to look at a number of different scenarios related to fuel consumption and vehicle emissions in order to make more informed decisions about choosing the right car to buy.
For each new vehicle produced, the car manufacturer will publish three different fuel consumption rates, for different driving environments:
These rates are expressed in litres per $100$100 kilometres (L/$100$100 km).
Car manufacturer's also publish a combined rate for carbon dioxide (CO_{2}) emissions, from the vehicle's exhaust system. CO_{2} is the main contributor to climate change.
Fuel prices are expressed as cents per litre (c/L).
The following table displays some data for the petrol and diesel versions of a 2019 model Hyundai i30 hatchback.
Both vehicles have 4-cylinder engines and a fuel tank capacity of $50$50 litres. The table indicates the three fuel consumption rates and the combined CO_{2} emissions rate for each vehicle.
When consumers purchase this car, they may choose between either a petrol or diesel engine.
Vehicle make and model | Fuel type | Combined (L/100 km) | Urban (L/100 km) | Extra urban (L/100 km) | Combined CO_{2} (g/km) | Purchase price |
---|---|---|---|---|---|---|
Hyundai i30 (2019) | petrol | $7.3$7.3 | $9.7$9.7 | $5.9$5.9 | $170$170 | $\$23414$$23414 |
Hyundai i30 (2019) | diesel | $4.5$4.5 | $5.4$5.4 | $4.0$4.0 | $119$119 | $\$26015$$26015 |
To compare the fuel economy of these vehicles, assume that each car travels an average of $50$50 kilometres per day.
The price of petrol is $128$128 cents per litre and the price of diesel is $143.9$143.9 cents per litre. Assume that these prices remain fixed throughout the year.
Follow the steps below:
The purchase price of the diesel car is greater than the petrol version. Separate loans are taken out for the full purchase price of each vehicle. Both loans have an interest rate of $8.49%$8.49% and a loan term of $5$5 years.
The following table compares fuel consumption rates, fuel tank capacity and CO_{2} emissions for three different types of vehicle: a sedan, an SUV (Sport Utility Vehicle) and a ute.
Vehicle | Type | Engine size (cc) | Combined (L/100 km) | Urban (L/100 km) | Extra urban (L/100 km) | Fuel tank capacity (L) | CO_{2} emissions (g/km) |
---|---|---|---|---|---|---|---|
Hyundai Sonata | sedan | $2359$2359 | $8.3$8.3 | $12.1$12.1 | $6.3$6.3 | $70$70 | $194$194 |
Mitsubishi Outlander | SUV | $1998$1998 | $7$7 | $8.9$8.9 | $5.9$5.9 | $63$63 | $162$162 |
Toyota Hilux | ute | $2694$2694 | $10.7$10.7 | $14$14 | $8.7$8.7 | $80$80 | $248$248 |
All three vehicles are powered by 4-cylinder petrol-engines and have a similar purchase price of around $\$35000$$35000.
All three vehicles are used to drive one-way along the same route from Sydney to Brisbane, a distance of $920$920 kilometres.
The average price of petrol along the route is $146.9$146.9 cents per litre.
Follow the steps below:
In this exercise, we will investigate how to claim car expenses as a tax deduction.
Anyone who uses their own car for the purpose of running their business, can claim business-related car expenses when they complete their tax return. This can be calculated using either of the following methods:
In this method a logbook is used to record the details of every journey made in the vehicle. The purpose of keeping a logbook is to work out what percentage of the vehicles's use is related to running the business. This is called the business-use percentage.
The logbook must be kept for a minimum period of $12$12 continuous weeks. For each journey, the date, odometer readings and a brief description of the usage (private or business), is recorded.
The car's odometer readings are used to determine the distance travelled for each journey.
Below is an example of how journeys are recorded in a typical vehicle logbook:
Journey start date | Odometer reading start of journey (km) | Journey end date | Odometer reading end of journey (km) | Reason for journey | Distance travelled (km) |
---|---|---|---|---|---|
5 Sep 2018 | $10200$10200 | 4 Sep 2018 | $10210$10210 | Private - travel to park | $10$10 |
5 Sep 2018 | $10210$10210 | 4 Sep 2018 | $10230$10230 | Business - visit client | $20$20 |
6 Sep 2018 | $10230$10230 | 5 Sep 2018 | $10245$10245 | Business - visit client | $15$15 |
7 Sep 2018 | $10245$10245 | 9 Sep 2018 | $10450$10450 | Private - weekend away | $205$205 |
At the end of the $12$12 week period, the business-use percentage is calculated as follows:
Divide the total business-use distance by the total distance travelled. Then multiply by $100$100.
To work out the amount that can be claimed as a tax deduction, multiply the business-use percentage by the total annual running costs for the vehicle.
Vehicle running costs can include:
Note that the purchase price of the vehicle and expenses like parking fees or fines cannot be claimed as tax deductions.
Using this method, the amount that can be claimed as a tax deduction is calculated simply by multiplying the total number of business-use kilometres by a fixed rate of $68$68 cents per kilometre (current for 2018/19 financial year).
The rate is designed to account for all running costs but this method can only be used to claim for a maximum of $5000$5000 business-use kilometres.
Consider the following scenario:
Amy lives in Sydney and runs her own business as a personal trainer. She owns a 2018 model Toyota Corolla hatch and uses her car for both private and business use.
During the past $12$12 weeks she has kept a vehicle logbook and recorded every journey she has made in her car.
Using her logbook, she works out that, over $12$12 weeks, she has travelled a total of $3840$3840 km, of which $960$960 km were for business use.
Follow the steps below:
Vehicle expense | Amount |
---|---|
Vehicle registration | $\$371$$371 |
CTP insurance | $\$455$$455 |
Comprehensive insurance | $\$1600$$1600 |
Service/maintenance | $\$360$$360 |
Depreciation | $\$4250$$4250 |
Fuel | |
Total |
Calculate Amy's tax deduction using the logbook method by multiplying her business-use percentage by her total annual car expenses.
Calculate Amy's tax deduction using the cents per kilometre method. First work out her business-use kilometres for the entire year. Then multiply by the rate of 68 cents per kilometre.
Which of the two calculation methods works best in Amy's situation?
What factors do you think might determine which method is better to use in other situations? Investigate what the outcome would be if the vehicle was larger and less fuel efficient or if the business-use percentage was higher.
represents information in symbolic, graphical and tabular form
models relevant financial situations using appropriate tools
makes predictions about everyday situations based on simple mathematical models