Car travel as a tax deduction

If you use your car for work you are entitled to claim the expenses that relate to the business costs of using your car to do your job as a tax deduction.

There are a number of methods you can use to claim the car expenses.

You must own the car to claim under any of these methods and the record keeping requirement is detailed for each method.

Method 1 – Cents per kilometre

  • Your claim is based on a set rate for each business kilometre you travel and you can claim a maximum of 5,000 kilometres under this method.  If you travel more than 5,000 kilometres the claim must be limited to 5,000 or you need to use an alternative method of claim.
  • You do not need written evidence but you need to be able to demonstrate that you have incurred the expense.  Diary records will suffice.

Method 2 – 12% of original value

  • Your claim is based on 12% of the original value of your car.  Luxury car limits apply.
  • Your car must have (or would have) travelled more than 5,000 business kilometres in the income year.

Method 3 – One-third of actual expenses

  • You claim one-third of your car’s expenses.
  • Your car must have (or would have) travelled more than 5,000 business kilometres in the income year.
  • You need written evidence of fuel and oil costs and for all other expenses for the car.

Method 4 – Logbook

  • Your claim is based on the business use percentage of each car expense which is determined by a log book that must have been kept for a minimum 12 week period.  This log book must be updated every 5 years.
  • You need odometer readings for the start and end of the period that you owned or leased the car.
  • You need to detail all the kilometres you have travelled for the log book period.
  • You can claim all expenses that relate to the operation of the car and you will need to keep receipts to justify your claim.

Important Note:  If your car is provided by your employer, or as part of your salary package you cannot claim any of the car costs, whatsoever.

What you cannot claim

  • You cannot claim the cost of normal trips between home and work because that travel is private even if:
  • You do minor tasks on the way to work, such as picking up the mail
  • You travel back to work for a security call out or parent teacher interviews
  • You work overtime and no public transport is available to use to get you home

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