How do you work out car expenses?
There are some changes to work-related car expense deductions from 1 July 2015. Below is a breakdown of the methods and calculations which applied from and before 1 July 2015.
From 1 July 2015 – two methods
The government has simplified the car expense deductions for 2015–16 and future income years. From 1 July 2015, the one-third of actual expenses method and 12% of original value method have been abolished.
The two methods available from 1 July 2015 are:
- cents per kilometre method (with some changes)
- logbook (with no change to its rules)
The cents per kilometre method
When working out your deduction using the cents per kilometre method:
- you do not need receipts or other written evidence but we may ask you to show how you worked out your estimate of business kilometres. For example
- by using a diary of work-related travel
- by basing your costs on a regular pattern of travel
- you can claim only up to the first 5,000 business kilometres you travel.
The logbook method
To work out your deduction using the logbook method, you must keep:
- a logbook
- odometer records, and
- receipts and other written evidence for all your car expenses. You can use your odometer readings to estimate your fuel and oil costs instead of keeping receipts.
Before 1 July 2015 – four methods
For 2014–15 and earlier income years, there are four different methods for claiming work-related car expenses when using your own car, or one you leased or hired under a hire-purchase agreement.
The four methods are:
- Cents per kilometre method
- 12% of original value method
- On-third of actual expenses method
- Logbook method
D1 - Work-related car expenses.