Motor Vehicle Expenses - work related deductions

If you use your car for work-related travel, the ATO allows you to claim deductions under four different methods. Each method has different eligibility criteria and record-keeping requirements. Choosing the right one could significantly impact your refund.

Let’s explore each method and see how they work.

1. Cents per Kilometre Method (Claim Type ‘S’)

This method uses a flat rate per kilometre for work-related travel, with the ATO setting a rate per kilometre based on your car’s engine size. You can claim up to 5,000 business kilometres per vehicle.

📌 Pros:

• No written evidence required

• Simple and straightforward

📌 Cons:

• Deduction is capped

• Assumes a standardised cost per kilometre

Example:If you travelled 3,800 km and the rate is $0.63/km:3,800 x $0.63 = $2,394 deduction

2. 12% of Original Value Method (Claim Type ‘T’)

You can use this method if you travelled more than 5,000 business kilometres during the financial year. You can claim 12% of your car’s original purchase price (up to the luxury car limit).

📌 Pros:

• High-value deduction for expensive vehicles

• Minimal paperwork

📌 Cons:

• Only for high-usage vehicles

• Car value must be known and capped

3. One-Third of Actual Expenses Method (Claim Type ‘O’)

If you travelled more than 5,000 km, you can claim one-third of your total car expenses—including fuel, insurance, registration, repairs and servicing.

📌 Pros:

• Captures actual costs

• Can result in high deductions if expenses are substantial

📌 Cons:

• Requires receipts and records

• Excludes purchase price, loan repayments and modifications

4. Logbook Method (Claim Type ‘B’)

This is the most detailed method but potentially the most rewarding. It allows you to claim the business-use percentage of all your car expenses based on a maintained logbook over a 12-week representative period.

📌 Pros:

• Accurate reflection of actual business use

• Potentially highest deduction

📌 Cons:

• Requires detailed records and ongoing tracking

• Must keep logbook updated at least every 5 years

Example:If you travelled 54,875 km and 31,200 km were for work (56.86%), and your total car expenses were $9,500:0.5686 x $9,500 = $5,401.70 deduction

What Expenses Can You Claim?

Regardless of method (except cents per km), you may be able to claim:

• Fuel and oil

• Registration

• Insurance

• Repairs and maintenance

• Depreciation (logbook only)

Which Method Should You Use?

If you’re eligible for more than one method, we can calculate each option and determine which gives you the highest deduction.

✅ Under 5,000 km? Use Cents per Kilometre

✅ Over 5,000 km and high car value? Consider 12% Original Value

✅ Lots of expenses? One-third Actual or Logbook may suit

✅ Want accuracy and highest refund? Stick to the Logbook Method

Need help choosing the best method or maintaining your records? Contact Dolman Bateman, we’ll make sure you claim every dollar you’re entitled to.

Meeting with Gavin Bateman

Book Now

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.