Car expense claims are one of the most popular deductions claimed by individuals at tax time each year, but the ATO says not everyone gets it right – and stresses this is not a “standard” deduction. Make sure you know the basic rules for when and how you can make a claim.
These rules apply to a car you own or lease that is designed to carry a load of less than one tonne and fewer than nine passengers. Motorcycles, bigger cars and cars hired intermittently (eg a car hired for a week) have different rules.
Generally, you can’t deduct costs of travelling between home and your regular workplace. However, you can claim for car travel between two different workplaces or between your home and an alternative workplace that is not your usual workplace (eg a client’s premises).
You’re also entitled to claim for travel if you need to drive your own car as part of your job. This might include:
There are two methods for calculating your claim.
You’re free to choose the method that best suits you, and you can choose different methods for different income years.
The simplest is the “cents per kilometre” method, which allows you to claim at a rate of 68 cents per kilometre travelled for work purposes (for 2018–2019). This rate is set by the ATO and is considered to reflect average operating costs, including depreciation. Here are some key points:
The alternative method is the “logbook method”, which allows you to claim a percentage of your actual car expenses based on work use. This method requires more record-keeping, but may be worthwhile if it gives you a bigger deduction. You should note:
Car expense deductions require careful record-keeping. In particular, getting your 12-week logbook right is essential to ensuring it remains valid for five years. We’re here to help. Our expert team can check whether you’re claiming your full entitlements and ensure your records will stack up in the event of an ATO audit.