Calculating tax deductions for car expenses.

If you use your own car in performing your work-related duties (including a car you lease or hire), you may be able to claim a deduction for car expenses.

NOTE: If the travel was partly private, you can claim only the work-related portion.

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 job as an employee – for example, to:

  • carry bulky tools or equipment (such as an extension ladder or cello) that your employer requires you to use for work and there is no secure storage available at work
  • attend work-related conferences or meetings away from your normal workplace
  • deliver items or collect supplies
  • travel between two separate places of employment, but not if 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

When you can’t claim
The primary rule is that generally trips between home and work cannot be claimed unless you are required to use your car for work for a specific purpose.

“You must have a work-related need to travel while performing your job, like travelling from site to site or be required to transport bulky tools.”

How Are Claims Calculated?
There are two main methods to claim car-related expenses on tax — the cents per kilometre method and the log book method.

Under the cents per kilometre method:
A single rate is used. Your claim is based on 68 cents per kilometre. You can claim a maximum of 5,000 business kilometres per car.

You may need to provide written evidence to show how you worked out your business kilometres (for example, by producing diary records of work-related trips).

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.

Under the logbook method:
Your claim is based on the business-use 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
any improvement costs.

To work out your business-use percentage, you need a logbook and the odometer readings for the logbook period. The logbook period is a minimum continuous period of 12 weeks.
You can claim fuel and oil costs based on either your actual receipts OR 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.

The ATO will be monitoring all car expense claims, so give us a call if you are unsure of what to claim. Our experienced tax agents will make sure your claim is accurate.