Your business structure affects your deductions

The motor vehicle expenses you can claim depends on your business structure (sole trader, company, partnership or trust), and whether your income includes personal services income (PSI).

Company or trust

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 FBT cost is also tax deductible.

Sole trader or partnership

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 – when private use is restricted to home-to-work travel and very minor other use
  • a deduction for the business use of a vehicle you own, lease or hire under a hire purchase agreement – this can include an ordinary car, station wagon or four-wheel drive, or most other vehicles designed to carry less than one tonne or fewer than nine passengers.


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

See also:

Last modified: 13 Mar 2015QC 44461