What you can claim
You can claim tax deductions for your car expenses when you are using your car to:
• perform your work duties
• attend work-related conferences or meetings away from your normal workplace
• travel directly between two separate places of employment if neither of the places is your home
• travel from your normal workplace to an alternative workplace and back to your normal workplace
• travel from your home to an alternative workplace and then to your normal workplace
• perform work at different sites or bases
You can only claim a deduction for actual expenses, such as fuel, if you are using a car registered in someone else’s name, unless you have a private arrangement to regularly use that car.
What you can't claim
Deductions are not allowed when
• you travel between home and work , even if you work outside normal business hours, unless:
• your home was a base of employment (that is, you were required to start your work at home and travel to a workplace to continue your work for the same employer)
• you are required to carry bulky tools or equipment that are essential for work
• there was no secure storage for the items at the workplace.
• you have been reimbursed for your expenses.
• you use someone else’s car for work purposes,
• your vehicle does not fit the definition of a car, such as
• a motorcycle
• a vehicle that has a carrying capacity of one tonne or more, such as a ute, truck or van, or
• a vehicle with a passengers capacity of 9 or more, such as a minivan.
For these vehicles, you can only claim a deduction for actual expenses you incur when you travel for work (such as fuel).
How you can claim
You can claim car expenses under 2 methods: the cents-per-kilometer method, and the log book method.
Cents per kilometer method
Under this method, you can claim
• a maximum of 5,000 work-related kilometres per car
• 78 cents per kilometre from the 2023 tax year
• 72 cents per kilometre for 2021 and 2022 tax years.
• 68 cents per kilometre for the 2019–20 financial year.
The cents per kilometre rate allows for all expenses including registration and insurance, maintenance, repairs, fuel costs and wear and tear (or depreciation).
Under this method, you don’t need to record the odometer reading at the start and end of the income year, only a diary of the trips and distance to support the kilometers you claim, and that you own the car.
If you travel more than 5,000 kilometres for work, the log book method is the one to use.
The log book method
The key requirement is to keep a logbook showing the trip purpose and distance for a continuous, representative 12-week period. You also need to record the starting and ending odometer for the income year.
You claim the business or work percentage of your total car expenses.
Your business or work percentage is your total business trip kilometres as a proportion of the total kilometres your car has travelled during that 12 weeks period.
You can claim running costs. You cannot claim the purchase price or cost of major modification, but you can claim depreciation(unless you are a business and the car is registered under the business name, in which case you can claim immediate write-off or temporary full expensing as a COVID relief for the 2020–21,2021–22 and 2022-23 income years).
You need written evidence for all car expenses and ownership of the car.
About Wilson & Assoc
Wilson & Assoc Chartered Accountants provides taxation and business advisory services to individuals, investors and businesses wherever you are based. We provide specialist services to startups and health care providers.
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Disclcaimer: The information provided within this article is general information only. None of the comments in these notes are intended to be advice, whether legal, financial product or professional. You should obtain specific advice regarding your particular circumstances from a tax or legal professional.
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