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

See also:

D1 - Work-related car expenses.

    Last modified: 05 Jul 2016QC 22093