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  • Motor vehicle expenses

    The amount of motor vehicle expenses you can claim depends on your business structure.

    If you operate your business as a company or trust, you can claim a full deduction for expenses you incur in running a motor vehicle that your company or trust leases or owns. If you, or other company or trust employees (or their associates), use the vehicle for private purposes, you may have to pay fringe benefits tax (FBT). The cost of FBT is also a deduction.

    If your income includes personal services income (PSI), and the PSI rules apply, you may be able to claim a deduction for only one car you use for business and private purposes.

    Find out more

    End of find out more

    If you operate your business as a sole trader or a partnership that includes at least one individual, you can claim a:

    • full deduction for a business-purpose vehicle – a truck or van, or a smaller vehicle, such as a ute, wagon or panel van that has been heavily modified for business use, or where private use is restricted to home-to-work travel and very minor other use
    • vehicle expense deduction for a vehicle you own, lease or hire under a hire purchase agreement – for an ordinary car, station wagon or four-wheel drive, or for most other vehicles designed to carry less than one tonne or fewer than nine passengers.

    Watch

     

    Duration 3m:30s. A transcript of Business deductions – Motor vehicle expenses: Tax basics for small business is also available.

    This video explains when you can claim a deduction for motor vehicle expenses in your business and how to work out your claim.

    End of watch

    Calculating your deduction

    If you operate your business as a sole trader or a partnership that includes at least one individual, there are four methods you can use to work out the amount you can claim.

  • Last modified: 01 Oct 2014QC 33720