If you use your own car in performing your work-related duties (including a car you lease or hire under a hire-purchase agreement), you may be able to claim a deduction for car expenses using either the cents per kilometre or logbook method.
If your travel was partly private, you can claim only the work-related portion.
This information relates to car expenses only. A car is defined as a motor vehicle (excluding motorcycles and similar vehicles) designed to carry a load less than one tonne and less than nine passengers. Many four-wheel drive vehicles are included in this definition.
When you can claim
You can claim a deduction for work-related car expenses if you use your own car in the course of performing your work duties as an employee. – for example, to:
- attend work-related conferences or meetings away from your normal workplace
- deliver items or collect supplies
- travel directly between two separate places of employment, if neither one of the places is your home (for example, when you have a second job)
- travel from your normal workplace to an alternative workplace (that isn’t a regular workplace) and back to your normal workplace or directly home
- travel from your normal workplace or your home to an alternative workplace that is not a regular workplace (for example, a client’s premises)
- perform itinerant work – meaning you had shifting places of employment (for example, you regularly work at more than one site each day before returning home).
In limited circumstances you can claim the cost of trips between home and work, where:
- your home was a base of employment (that is, you were required to start your work at home and then travel to a workplace to continue your work for the same employer)
- you were required to carry bulky tools or equipment for work and all of the following conditions were met:
- The tools and equipment were essential for you to perform your employment duties and you didn’t carry them merely as a matter of choice.
- The tools or equipment were bulky meaning that because of their size and weight they are awkward to transport and could only be transported by motor vehicle.
- There was no secure storage for the items at the workplace.
If you receive an allowance from your employer for car expenses, it is assessable income and the allowance must be included on your tax return. The amount of the allowance is usually shown on your income statement or payment summary.
Using someone else’s car or other vehicle
If you use someone else’s car or other vehicle (that is not defined as a car) for work purposes, you may be able to claim the actual expenses (such as fuel) as a work-related travel expense in your tax return.
A vehicle is not considered a car if it is a motorcycle or vehicle with a carrying capacity of
- one tonne or more, such as a utility truck or van
- nine passengers or more, such as a minivan.
Cars owned or leased by someone else may include a spouse, family member or employer. However, if you can show there is a family or private arrangement that made you the owner or lessee (even if you are not the registered owner) you can calculate your car expenses using either the logbook or cents per kilometre method.
We recommend keeping a logbook for these vehicles as an easy way to show how you calculated your work-related use of the vehicle.
When working out your claim, you need to use the actual costs of your motor vehicle expenses. You need to keep receipts for the actual costs you incur (such as fuel and oil). You can use the myDeductions tool to help keep your records.
When you can’t claim
Generally, you can’t claim the cost of travel between home and work under any of the methods, even if you live a long way from your usual workplace or work outside normal business hours. This is private travel.
You also can’t claim a deduction for car expenses that have been salary sacrificed or where you have been reimbursed for these expenses.
Calculating your deductions
You can choose one of the following two methods to calculate your deduction for car expenses:
- cents per kilometre method
- logbook method.
If you claim a work-related car expense using the cents per kilometre or logbook method, you can’t claim any further deductions in the same tax return for the same car.
If you are claiming car expenses for more than one car, you can use different methods for different cars. You can also switch between the two methods for different income years for the same car.
The myDeductions tool in the ATO app can help you keep records of your car use for both of the calculation methods. There are three options for recording your car trips in myDeductions, including:
- a point to point trip
- a GPS trip
- an odometer trip.
If you’re using the logbook method, you can create a valid digital logbook record using the myDeductions tool.
Cents per kilometre method
Under the cents per kilometre method, you:
- can claim a single rated of 68 cents per kilometre from 1 July 2018 (72 cents per kilometre from 1 July 2020)
- can claim a maximum of 5,000 work-related kilometres per car
- may need to provide written evidence to show how you worked out your work-related kilometres (for example, by producing diary records of work-related trips)
- need evidence that you own the car.
Where you and another joint owner use the car for separate income-producing purposes, you can each claim up to a maximum of 5,000 business kilometres.
The cents per kilometre rate covers decline in value, registration, insurance, maintenance, repairs and fuel costs. You can’t add these expenses on top of the rate when calculating your deduction.
Use our Work-related car expenses calculator to help you calculate your claim for work-related car expenses for eligible vehicles.
Under the logbook method, your:
- claim is based on the work-related percentage of the expenses for the car
- expenses include running costs and decline in value but not capital costs, such as the purchase price of your car, the principal on any money borrowed to buy it and any improvement costs (for example, adding paint protection and tinted windows)
- need to provide written evidence to show how you worked out your work-related use, you need a logbook and the odometer readings for the logbook period.
- claim for fuel and oil costs are based on either your
- actual receipts
- estimate of the expenses based on odometer records that show readings from the start and the end of the period you had the car during the year.
You need written evidence for all other expenses for the car including evidence that you own the car and the odometer reading at the start and end of the period you used the car during the year.
Your logbook must cover at a minimum 12 continuous weeks. Your 12 week logbook is valid for five years.
If you started using your car for work-related purposes less than 12 weeks before the end of the income year, you can extend the 12 week period into the next financial year.
If your circumstances change (for example, you change jobs or move house) and the logbook is no longer representative of your car expenses, you will need to complete a new 12-week logbook.
Calculating your work-related use
Using your logbook record of 12 continuous weeks of car use, follow the steps below to work out your deduction for car expenses using the logbook method.
- Calculate the total number of kilometres travelled during the logbook period.
- Calculate the number of kilometres you travelled for allowable work-related trips during the logbook period.
- Calculate the work-related use by dividing the amount at (b) by the amount at (a) then multiply this figure by 100 – this is your work-related percentage.
- Multiply your work-related percentage by your car expenses to calculate your claim.
Damage to a third-party motor vehicle
If you use your own motor vehicle in the course of your employment and you are involved in an accident that causes damage to another vehicle, you may be able to claim a deduction for the costs you incurred.
If you are liable for the damages or compensation for the damage to the other vehicle, you may be able to claim a deduction for the costs you incurred.
If an accident occurs in the course of your employment, the expenses relating to your liability to pay for the damage to the other vehicle in the accident are incidental and relevant to you earning your assessable income. They are not capital, private or domestic.
To contact our tax consultant to claim your deductions and advice at click on
Ph 13 75 77 75
This reading material was extracted from Australian Tax Office (ATO) website on 24 June 2020. This post and the information therein is for general information only and does not constitute legal, financial or taxation advice from PTB. Other requirements under tax law may apply and may change. If you wish to act on any of the material in this video, you should contact PTB for professional advice that takes into account your own specific circumstances.