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  • Claiming a tax deduction for motor vehicle expenses

    As a business owner, you can claim a tax deduction for expenses for motor vehicles used in running your business.

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    Media: Claiming deductions - Motor vehicle expenses
    http://tv.ato.gov.au/ato-tv/media?v=bi9or7od7bf956External Link (Duration: 01:18)

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

    Types of vehicles

    Cars (for income tax purposes) are defined as motor vehicles (including 4-wheel drives) designed to carry both:

    • a load less than one tonne
    • fewer than 9 passengers.

    Other vehicles include:

    • motorcycles
    • vehicles designed to carry either  
      • one tonne or more (such as a utility truck or panel van)
      • 9 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).

    Make sure you use the correct calculation method when claiming motor vehicle expenses. Using the wrong method can lead to incorrect claims. For more information see Calculation methods for claiming business motor vehicle expenses.

    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.

    It is important to keep records. You can use a logbook or diary to record private versus business travel. For more information see Motor vehicle expense records you need to keep.

    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. For more information see Motor vehicle expenses for a home-based business.

    You can also refer to Motor vehicles used by shareholders of private companies.

    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 9 passengers.

    Last modified: 02 Aug 2023QC 33720