If you use your car for work related journeys, other than to and from work, it’s likely that you can claim your car expenses on your tax return.
Work related car deductions are a very common type of deduction and are easy to claim correctly (and boost your refund).
What car expenses can I claim?
The ATO states that you can claim car expenses if you:
- Do work related journeys during the day/night.
- Drive to work related conferences or meetings that aren’t held at your usual place of work.
- Travel between two places of employment if neither of them is your home.
- Drive from a normal workplace to a different workplace, then back to where you would usually work.
- Drive from home to a workplace that isn’t your usual place of work and then drive to your usual workplace – or directly home.
- Regularly work at more than one site each day so you drive between them before driving home.
- Carry bulky or heavy tools or equipment to and from work and you are not able to store them safely at work.
When you can’t claim a tax deduction for car expenses:
- You can’t claim car expenses for travel between home and work or vice versa, even if you live a long way from your work.
- You can’t claim car expenses on your tax return if you were reimbursed for them by your employer.
Car deduction methods
There are two methods to calculate car expense claims on your tax return:
- Cents per km method, or
- Car Logbook method
Which car tax deduction method is best for me?
Claiming car expenses correctly on your tax return can put big dollars in your pocket at tax time, so knowing which method is best for you is important.
Claiming car expenses: Cents Per Km method
How does the cents per km method work?
- Claim up to 5000km per year using this method
- No log book required
- ATO can ask you to explain how you calculated your claim and how the use of your car was work related
- The rate you can claim depends on the tax year you are claiming your car usage for, check the table below for the rates.
Cent Per Kilometre Rates
|2023 – 24||85 cents per km|
|2022 – 23||78 cents per km|
|2021 – 22||72 cents per km|
|2020 – 21||72 cents per km|
|2019 – 20||68 cents per km|
|2018 – 19||68 cents per km|
|2017 – 18|
2016 – 17
2015 – 16
|66 cents per km|
Example: Julie is an administration officer for a small business. In the 2022/23 tax year she does 4 trips per day in her car to collect/drop off deliveries and do the banking. She drives approximately 14km per day in work related travel.
Therefore, Julie can claim:
- 14km X 5 days = 70km p/week
- 70km per week X 48 weeks (Julie has 4 weeks leave each year) = 3360km
- 3360km X $0.78 = $2620.80
This means at the car expenses section of her tax return, Julie can claim a car expenses deduction of $2620.80.
NOTE: This method covers all car related expenses, including insurance, registration, annual repairs, maintenance, and fuel costs. So remember, you can’t add these expenses on top of the cents per kilometre total when working out your deduction.
Claiming car expenses: Logbook method
We’ve got a detailed article about the car logbook method so we’ll just cover the basics here:
How it works:
- Keep a logbook for 12 continuous weeks
- You must own the car
- A completed logbook is valid for 5 years as long as your pattern of use remains consistent
- If you get a new job or your amount of driving changes, a new 12 week logbook is required
- Record all business trips AND all personal trips in your car logbook
- Keep receipts for all expenses related to your car, including:
- Interest on loan costs
- Other running costs
Once you complete your logbook, you then calculate your business-use percentage. (That is the ratio, or percentage split, between work and personal driving.) Then, you claim the business percentage of all expenses related to your car.
Example: Jeff is a sales manager and he kept a logbook for 12 weeks recording both work and personal trips which totalled 1000 km. Of this, Jeff added up 850 km travelled on work related trips. Finally, he divided his work kms by total kms and that is his work related percentage.
- 850km divided by 1000km = 85%
Jeff adds up the receipts for all of his car expenses for the year, which total $8,350. Then he multiplies that by 85%, his work-related percentage.
- $8350 x 85% = $7097.50
Jeff can claim $7097.50 worth of deductions at the car expenses section of his tax return.
Free car logbook template
Download a free car logbook template
NOTE: If you claim car expenses for more than one car, you don’t need to use the same method for both cars.
What if I use a motorbike or a van for work related travel?
There are different rules for vehicles such as:
- utes, trucks or vans with a carrying capacity of a tonne or above
- or a minivan capable of carrying nine or more passengers
Expenses associated with these types of vehicles are claimed at the travel expenses section of your tax return.
As with car expenses, you keep a record in a logbook as well as all associated costs of running the vehicle and claim them in the travel expenses section of your return.
If you’re not sure which method is best for you, please don’t hesitate to get in touch via Live Chat (from within your Etax account) call us on: 1300 693 829 or send us an email to: [email protected].