You may be able to claim a deduction for motor vehicle expenses, if you use the vehicle in performing your work-related duties. How you work out your deduction will depend on a number of different factors, as outlined below, but it is important to note that certain record keeping rules apply to claiming car expenses.
You can claim a deduction for using a car that you owned, leased or hired under a hire purchase agreement using the cents per kilometre or logbook method. The type of car expense records you need to keep depends on the method you used to calculate your claim.
You don’t need receipts but you need to be able to show how you worked out your business kilometres (for example, by producing diary records of your work-related trips). If you use the cents per kilometre method, your claim is based on a set rate (72 cents per kilometre from 1 July 2020) for each business kilometre travelled. You can claim a maximum of 5,000 kilometres per car.
If you borrowed a car or used a vehicle other than a car (for example, a motorcycle or a vehicle with a carrying capacity over one tonne, such as a utility truck or panel van) you can’t claim your expenses using either of the two methods. Instead, you need to keep all your receipts (such as fuel and repairs) and claim the work-related portion of these costs as a travel expense, not a car expense. While it is not a requirement for you to keep a log book, it is the easiest way to show how you calculated your work-related use of the vehicle.
Your claim must be based on the percentage of work use of your car. To work this out you need to keep a valid logbook.
Your logbook must:
- cover a minimum continuous period of 12 weeks and be broadly representative of your travel throughout the year
- include the purpose of every journey, odometer reading at the start and end of each journey and total kilometres travelled during the period
- include odometer readings at the start and end of each income year.
Your logbook is valid for five years, but you can start a new logbook at any time. If the work use of your car is no longer representative of work-related travel you undertake, you need to complete a new logbook.
You can claim fuel and oil costs based on your actual receipts, or you can estimate the expenses based on odometer readings from the start and the end of the period in which you used the car during the year.
You must keep:
- original receipts for all other expenses for the car
- details of how you calculated your claim for decline in value of your car, including the effective life and method used.
If your claim relates to the transport of bulky tools and equipment, you will need:
- a record of all work items carried
- the weight and size of all work items
- evidence the items carried are essential to your work
- evidence that your employer provided no secure storage at the workplace.
This information is provided by the Australian Taxation Office. The Australian Taxation Office offers detailed advice and information for you to consider before making any claims. For information and direct advice on deductions and claims visit Australian Taxation Office.