Can you claim car expenses as deduction?

Claiming a deduction for car expenses

To claim a car expense deduction:

• Your vehicle must be a car (motor vehicle carrying less than one tonne and fewer than 9 passengers).

• You must own or lease the car (not under salary sacrifice or novated lease).

• Expenses must be for work-related trips (between workplaces or for work duties, not home to work).

• You must have paid the expenses yourself without reimbursement.

• You must have required records.

Claim only the work-related portion for partly private travel. Claim as a work-related car expense on your tax return. Include any employer car allowance as assessable income.

Calculating deductions and keeping records

Use either of 2 methods:

1. Cents per kilometre method

2. Logbook method

Use the work-related car expenses calculator to determine your deduction.

Cents per kilometre method

Multiply work-related kilometres by the rate per kilometre for that income year. The ATO sets the rate each year.

For 2023–24, the rate is 78 cents per kilometre.

You can claim up to 5,000 kilometres per car each income year using this method.

You don't need written evidence but must be able to show how you calculated your work-related kilometres.

Logbook method

Calculate your work-related percentage of car expenses using a logbook and odometer readings.

Your logbook must cover at least 12 continuous weeks and be updated every 5 years. Record:

• When the logbook period begins and ends

• The car's odometer readings at the start and end

• Total kilometres travelled

• Journey details (date, reason, start and end points, kilometres travelled)

Calculate your work-related percentage by dividing work kilometres by total kilometres.

You can claim this percentage of your car's decline in value and running costs.

Keep all receipts/invoices for your car expenses.

Use the myDeductions tool in the ATO app to record expenses and trips throughout the year.

• Use the rate for the income year you're claiming:

• 2024-25: 88 cents/km

• 2023-24: 85 cents/km

• 2022-23: 78 cents/km

• 2020-21 and 2021-22: 72 cents/km

• For earlier years, see prior year forms

• Claim up to 5,000 work-related km per car

• Keep records of how you calculate work-related km

Joint owners can each claim up to 5,000 work-related km if using the car for separate income-producing purposes.

The rate covers all expenses:

• Decline in value

• Registration

• Insurance

• Maintenance

• Repairs

• Fuel

Don't add these on top of the rate.

Example: Cents per kilometre deduction

Johan drives his car for work:

• 27 km weekly trip to meet clients (46 weeks)

• 106 km monthly trip to visit clients (12 trips)

He calculates:

• Weekly trips: 46 × 27 km = 1,242 km

• Monthly trips: 12 × 106 km = 1,272 km

• Total: 1,242 + 1,272 = 2,514 km

2023-24 deduction: 2,514 km × $0.85 = $2,137

Records for cents per kilometre

No receipts needed, but show car ownership and work-related km calculation. Record trips in a diary or the ATO app.

Logbook method

To use this method:

• Keep a 12-week logbook (valid for 5 years)

• Keep expense receipts

• Calculate deductible portion using logbook

Logbook requirements

• Cover 12+ continuous weeks, representative of your travel

• Include trip details, odometer readings, total km

• Record start/end odometer for logbook period

Valid for 5 years unless circumstances change significantly. For following 4 years, keep:

• Start/end odometer readings

• Work-related use percentage

Use separate logbooks for multiple cars, covering the same period.

Keep electronic (ATO app) or paper logbook. Retain records for 5 years after the latest income year claimed.

Expense records for logbook method

Keep receipts for:

• Fuel and oil (or estimate based on odometer readings)

• Other expenses (registration, insurance, services, etc.)

• Car purchase price and decline in value calculation

Electric cars - electricity expense records

For electric cars, keep electricity expense records instead of fuel and oil receipts.

• receipts for commercial charging stations

• proof of home charging costs (electricity bill and calculation)

• odometer readings for claim period

Alternatively, use the EV home charging rate of 4.2c/km for a reasonable estimate. If using this rate, disregard commercial charging costs.

Hybrid cars - fuel, oil, and electricity records

For hybrids, keep:

• fuel and oil receipts

• commercial charging station receipts

• home charging cost evidence

• odometer readings

EV home charging rate not applicable for hybrids.

Capital costs (purchase price, loan principal, improvements) can't be claimed.

Calculating deduction with logbook

1. Total km during logbook period

2. Work-related km during logbook period

3. Calculate work-related use percentage: (2) ÷ (1) × 100

4. Total expenses for claim period

5. Deduction amount: (3) × (4)

Remember to maintain accurate records and follow the guidelines for your specific vehicle type to ensure proper deductions.