WORK RELATED CAR EXPENSES
- Arnold Shields
- Jul 4, 2019
- 3 min read
Updated: May 21
If you use your car for work purposes, you may be eligible to claim a deduction for work-related car expenses in your tax return. But it’s critical to understand what qualifies as a legitimate claim and how to calculate it properly, especially as the ATO tightens compliance around travel deductions.
What Qualifies as Work-Related Car Travel?
To make a claim, you must determine which portion of your car usage is genuinely work-related. The ATO does not allow claims for private travel such as driving between your home and regular place of work.
However, you can claim travel that includes:
Trips between different job locations on the same day.
Travel from home only if you carry bulky equipment essential to your work and there is no secure storage at your workplace.
Travel to an alternate work site for a short-term assignment or meeting.
Two ATO-Approved Methods for Claiming Car Expenses
Since 1 July 2015, there are only two ATO-approved methods for calculating work-related car expenses:
1. Cents Per Kilometre Method
Rate: A flat rate of 66 cents per kilometre (as of 2015–16) applies for up to 5,000 business kilometres per car, per year.
No logbook needed, but the ATO may request evidence on how you calculated the distance.
Simple and fast, but limited in maximum claimable value.
2. Logbook Method
This method allows you to claim a percentage of all car-related expenses based on actual business use.
To use this method:
Maintain a 12-week continuous logbook period detailing each trip.
For each journey, record:
Start and end dates
Odometer readings at the start and end
Distance travelled
Purpose of the trip
At the end of 12 weeks, calculate your business use percentage:
Business Kilometres ÷ Total Kilometres Travelled
You must also keep written records of all car expenses (fuel, servicing, registration, insurance, depreciation, interest on car loans, etc.) for five years.
A logbook is valid for five years, but you must record opening and closing odometer readings each financial year.
Multiple Cars? Log Separately
If you're using this method for more than one car, you must:
Keep a separate logbook for each vehicle.
Ensure all logbooks cover the same 12-week period.
How to Report Your Claim
Once you’ve calculated your claimable amount, report it at:
Item D1 – Work Related Car Expensesunder the Deductions section of your individual tax return.
Final Tip from Dolman Bateman
The ATO expects accurate, justifiable records. Whether you choose the simplicity of the cents per kilometre method or the more detailed logbook method, make sure your claim is honest and well-documented.
Need help with your logbook or unsure what qualifies as work-related travel? Speak with our team at Dolman Bateman, we’ll ensure you’re claiming what you’re entitled to, and nothing that will risk an audit.
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.
