Choosing a motor vehicle expense method
Claiming motor vehicle expenses for tax purposes just became simpler—but not without some important considerations. In a move to streamline the process, the Australian Government removed two of the four previous options for motor vehicle deductions starting from the 2015–16 financial year. You now have two methods to choose from: Cents per Kilometre Method or Logbook Method.
Let’s break down what each means for your bottom line.
1. Cents per Kilometre Method
Previously tied to engine size, the Cents per Kilometre method now offers a flat rate for all vehicles.
Rate: 66 cents per kilometre (subject to change annually by the ATO)
Cap: Max 5,000 km per vehicle per year
Max Deduction: $3,300
Documentation: Written evidence not required, but you may need to show how you estimated your kilometres
Best for: Individuals with modest business vehicle use who prefer simplicity over precision.
2. Logbook Method
This method is more involved—but often far more rewarding.
You’ll claim a portion of actual car expenses, based on a business-use percentage derived from a 12-week logbook period.
ExampleExpenses for the year:
Fuel & oil: $1,700
Depreciation: $6,000
Insurance & registration: $2,500
Repairs: $1,200
Total: $11,400
With a business-use percentage of 45%, the claimable deduction is $5,130.
Logbook Requirements:
Keep for 12 continuous weeks in the income year
Must record:
Start & end dates
Odometer readings
All trips (with reason, kilometres, odometer at start/end)
Logbook Validity: Once completed, it remains valid for five years, unless business use significantly changes.
Tools to Make It Easier
Don’t let paperwork scare you off—digital tools can help streamline the logbook process:
🔹 Logit
ATO-compliant smartphone app using GPS to track trips.
🔹 LogbookMe
GPS device plugs into your car’s OBD-II port and syncs data to an online platform for easy classification.
🔹 Prefer Pen & Paper?
Manual logbooks are still available and perfectly valid.
Which Method Should You Choose?
Criteria | Cents per Kilometre | Logbook Method |
Ease of Use | ✅ Simple | ❌ Time-consuming |
Max Claim | ❌ $3,300 cap | ✅ No cap |
Accuracy | ❌ Estimate only | ✅ Actual costs |
Best for | Low business-use drivers | High business-use drivers |
If your work-related car expenses exceed $3,300 and you're prepared to do some initial setup, the Logbook Method offers significantly better returns over time.
Disclaimer: The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. All content relates to the current financial year only. Future changes to tax laws, thresholds or administrative requirements may affect the accuracy or relevance of this information, so you should always confirm that the guidance remains current. While every effort has been made to ensure accuracy at the time of publication, Dolman Bateman accepts no responsibility or liability for any loss or damage arising from reliance on this information. You should seek professional advice tailored to your circumstances before making any financial or tax decision.
