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  • Claiming a tax deduction for motor vehicle expenses

    Watch:

    Media: Claiming deductions – motor vehicle expenses
    http://tv.ato.gov.au/ato-tv/media?v=bi9or7onh7drxs (Duration: 01:15)

    As a business owner, you can claim a tax deduction for expenses for motor vehicles – cars and certain other vehicles – used in running your business.

    For a summary of this content in poster format, see Motor vehicle expenses (PDF, 761KB)This link will download a file.

    On this page:

    Types of vehicles

    Cars (for income tax purposes) are defined as motor vehicles (including four-wheel drives) designed to carry both:

    • a load less than one tonne
    • fewer than nine passengers.

    Other vehicles include:

    • motorcycles
    • vehicles designed to carry either
      • one tonne or more (such as a utility truck or panel van)
      • nine passengers or more (such as a minivan).
       

    The motor vehicle must be owned, leased or under a hire-purchase agreement.

    If you operate your business as a company or trust, you can also claim for motor vehicles provided to an employee or their associate as part of their employment.

    Expenses you can claim

    You can claim:

    • fuel and oil
    • repairs and servicing
    • interest on a motor vehicle loan
    • lease payments
    • insurance cover premiums
    • registration
    • depreciation (decline in value).

    Separate private from business use

    If you use a motor vehicle for both business and private use, you must be able to correctly identify and justify the percentage that you are claiming as business use. The percentage that is for private use isn't claimable. This is an area where we often see errors made.

    You can use a logbook or diary to record private versus business travel.

    Travelling between your home and your place of business is considered private use, unless you are a home-based business and your trip was for business purposes.

    Next step:

    Find out about:

    See also:

    • Car limit – There is a limit on the cost you can use to work out the depreciation of passenger vehicles (except motorcycles or similar vehicles) designed to carry a load of less than one tonne and fewer than nine passengers.
    Last modified: 30 Jul 2021QC 33720