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.

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Disclaimer:

The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.