If you are claiming a deduction for using your own car in performing your employment duties (including a car you lease or hire), it is treated as a car expense.
If you use someone else’s car for work purposes, you may be able to claim the direct costs (such as fuel) as a travel expense.
If the travel was partly private, you can claim only the work-related portion.
On this page:
When you can claim and can’t claim for car expenses
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) which your employer requires you to use for work and cannot leave at work
- attend conferences or meetings
- deliver items or collect supplies
- travel between two separate places of employment, provided one of the places is not your home (for example, when you have a second job)
- travel from your normal workplace to an alternative workplace and back to your normal workplace or directly home
- travel from your home to an alternative workplace and then to your normal workplace or directly home (for example, if you travel to a client’s premises)
- perform itinerant work.
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 will usually be shown on your payment summary.
When you can’t claim
Most people can’t claim the cost of travel between home and work because this travel is private.
Calculating your deductions
There are some changes to work-related car expense deductions from 1 July 2015. Below is a breakdown of the methods and calculations which applied from and before 1 July 2015.
From 1 July 2015 – two methods
The government has simplified the car expense deductions for 2015–16 and future income years. From 1 July 2015, the one-third of actual expenses method and 12% of original value method have been abolished.
The two methods available from 1 July 2015 are:
- cents per kilometre method (with some changes)
- logbook method (with no change to its rules)
Cents per kilometre method
The cents per kilometre method is available for use with some changes. Separate rates based on the size of the engine are no longer available from 1 July 2015. Under the revised method, individuals use 66 cents per kilometre for all motor vehicles for the 2016–17 income year. The Commissioner of Taxation will determine the rate for future income years.
- Your claim is based on 66 cents per kilometre for 2016–17 income year
- You can claim a maximum of 5,000 business kilometres per car
- You don’t need written evidence but you need to be able 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 kilometres.
- 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 and 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 you can estimate 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.
- What is the correct withholding treatment for allowances?
- Work-related car expenses calculator
- Records you need to keep
Contact our office on 8186 8444 or email@example.com if you would like to clarify your specific circumstances so that you can ensure that you claim your car expenses correctly.
Australian Taxation Office: https://www.ato.gov.au/