Show download pdf controls
  • Motor vehicle and car expenses

    You can claim a deduction for motor vehicle or car expenses, where you use it in performing your work-related duties.

    On this page

    For a summary of this content in poster format, see Car expenses (PDF, 598KB)This link will download a file

    Eligibility

    How you work out your deduction motor vehicle or car expenses will depend on if you are using:

    • a car your own, lease or hire (under a hire-purchase arrangement)
    • someone else's car
    • a motor vehicle, that is not defined as a car.

    You can claim only work-related motor vehicle expenses you incur. You can't claim expenses that relate to your private use of your vehicle.

    How we define cars and other motor vehicles

    Cars are motor vehicles (excluding motorcycles and similar vehicles) that carry loads less than one tonne and less than 9 passengers. This definition includes many four-wheel drives.

    Vehicles that are not cars include motorcycles, scooters and similar vehicles as well as vehicles with:

    • greater than one tonne carrying capacity such as utes, trucks, heavy vehicles
    • a carrying capacity for 9 or more passengers such as a minibus.

    You can calculate Car expenses using either the cents per kilometre method or the logbook method. You can't use these methods to claim expenses for other vehicles.

    For vehicles that are not cars, you claim the actual costs you incur that relate to your work use of the vehicle.

    When you can't claim

    Whether your vehicle is a car or other vehicle, you generally can't claim the cost of expenses you incur for travel between your home and your regular place of work.

    Your regular place of work is the normal or usual place where you start and finish your work duties. You incur these expenses to put you in the position to earn your income. This is private travel even if, you either:

    • live a long way from your regular place of work
    • work outside normal business hours.

    In limited circumstances, travel between home and work expenses are deductible.

    You can't claim a deduction for car expenses that:

    • you pay for under a salary sacrifice or novated lease arrangement
    • your employer reimburses you for.

    Cars you use under a salary sacrifice or novated lease arrangement are usually on lease by your employer from a financing company. As you don't own or lease the car yourself under these arrangements, you can’t claim any deductions for using the car.

    When you can claim

    You can claim a deduction for work-related car expenses if you use your own car to:

    • perform your work duties – for example, if you travel from your regular place of work to meet with a client
    • attend work-related conferences or meetings away from your regular place of work
    • deliver items or collect supplies
    • travel between 2 or more separate places of employment, but not if one of the places is your home – for example, when you have more than one job
    • travel from your regular place of work to an alternative place of work (that isn't a regular place of work) and back to your regular place of work or home
    • travel from your regular place of work or your home to an alternative place of work that is not a regular place of work – for example, a client’s premises.

    Travel between home and work

    In limited circumstances, you can claim the cost of trips between home and your regular place of work, where:

    • your home was a base of employment – that is, your employer requires you to start your work at home and later travel to a workplace to continue the same work
    • you had shifting places of employment (itinerant work) – that is, you have no fixed place of work and you continually travel from one work site to another
    • you carry bulky tools or equipment for work and all of the following apply       
      • the tools or equipment are essential to perform your employment duties and you don't carry them merely as a matter of choice
      • the tools or equipment are bulky – meaning that because of their size and weight they are awkward to transport and can only be transported conveniently by the use of a motor vehicle
      • there is no secure storage for such items at the workplace.

    You must include any allowance you receive from your employer for car expenses, as assessable income in your tax return. The amount of the allowance is usually shown on your income statement or payment summary.

    For more information about claiming transport, see Transport expenses - trips between home and work and between workplaces.

    Calculate your deduction for other vehicles

    Work out your deduction for the expenses you incur when you use:

    Someone else's car

    If you use someone else's car you can claim a deduction for actual costs you incur that relate to your work use. You can't claim a deduction for expenses using the Cents per kilometre method or the Logbook method.

    Cars someone else owns or leases may include a spouse or family member. If you can show there is a family or private arrangement that made you the owner or lessee (even if you aren't the registered owner) of the car, you can work out your car expenses using either of the methods above.

    Example: family arrangement

    When Rory turned 18 years old, she bought a car from her parents for $1,000. She now pays the insurance, fuel, registration and other running costs and no one else uses the car. The registration has not been updated and the car is still showing in her mother's name.

    Rory is eligible to claim her work-related car expenses even though the registration has not been changed to her name. She would be treated as the owner because she can show that:

    • she bought the car from her parents
    • she is now responsible for all of the ownership and running costs of the car.
    End of example

    Vehicles which are not cars

    When working out your claim for a vehicle that is not a car, you need to work out the actual costs that relate to your work-related travel in the vehicle.

    You need to keep records of all your expenses (such as fuel) to prove your claims. Your records need to show how you calculated your work travel as a percentage of your overall travel.

    While it is not a requirement to keep a logbook, it is the easiest way to show how you have calculated your work-related use of the vehicle.

    You can use the myDeductions tool in the ATO app to help keep your records.

    You can't claim your deduction for other vehicles or someone else's car under work-related car expenses in your tax return.

    Claim your deduction for these vehicles as a work-related travel expense.

    Example: actual work-related expenses for a motorcycle

    Samid buys a motorcycle that he uses for his work making local deliveries. Samid also uses his motorcycle when he is not working so he decides to keep a logbook to work out his work-related use.

    Samid's logbook shows he travelled a total of 3,000 km on his motorcycle for the whole income year. During the 12-week period he kept his logbook, he travelled 800 km in total with 600 km being work-related travel.

    By dividing his total work-related kilometres by his total kilometres for the 12-week period, Samid calculates his work use percentage as 75% (600 ÷ 800).

    Samid keeps receipts for his expenses, these were for:

    Fuel and oil

    $560

    Repair

    $400

    Registration

    $540

    Compulsory Third Party insurance

    $300

    Decline in value

    $1,800

    Total

    $3,600

    Samid multiplies his work use percentage by the total expense to get his deduction of $2,700 ($3,600 × 75%).

    End of example

    Calculating your car expense deductions

    You use one of the following 2 methods to calculate deductions for car expenses:

    Use the Work-related car expenses calculator to work out your deduction for either method.

    If you are claiming car expenses for more than one car, you can choose to use a different method to work out your expenses for each car. You can also change the method you use in different income years for the same car.

    The myDeductions tool can help you keep records of your car use for both of the calculation methods. There are 3 options for recording your car trips in myDeductions, including:

    • a point to point trip
    • a GPS trip
    • an odometer trip.

    If you're using the logbook method, you can create a valid logbook record using the myDeductions tool.

    Cents per kilometre method

    Under the cents per kilometre method:

    • A single rate is used, the rate is:
      • 78 cents per kilometre from 1 July 2022 for the 2022–23 income year
      • 72 cents per kilometre from 1 July 2020 for the 2020–21 and 2021–22 income years
      • 68 cents per kilometre for 2018–19 and 2019–20
      • 66 cents per kilometre for the 2017–18, 2016–17 and 2015–16.
    • You can claim a maximum of 5,000 business kilometres per car.
    • To calculate your deduction, multiply the number of business kilometres you travel in the car by the appropriate rate per kilometre for that income year.
    • You need to keep records

    Where you and another joint owner use the car for separate income-producing purposes, you can each claim up to a maximum of 5,000 business kilometres.

    The cents per kilometre rate includes all expenses you incur for:

    • decline in value
    • registration
    • insurance
    • maintenance
    • repairs
    • fuel costs.

    You can’t add any of these expenses on top of the rate when you work out your deduction using this method.

    Example: car deduction using cents per kilometre

    Once per week, Johan makes a 27km round trip in his own car travelling from head office in the city to meet with clients. In addition, he makes a 106km round trip to visit clients at another location, once a month.

    When Johan consults his diary at the end of the 2021–22 income year, he works out he was at work for 47 weeks, but he missed one weekly meeting with clients as he was sick. He also determines that, although he was on leave for five weeks during the income year, he still made 12 × 106km round trips to visit clients.

    He works out his business kilometres as:

    Number of weekly trips × Distance of weekly trip = Total weekly trip kilometres

    46 × 27km = 1,242 km

    Number of monthly trips × Distance of monthly trip = Total monthly trip kilometres

    12 × 106 = 1,272 km

    Total weekly trip kilometres + Total monthly trip kilometres = Total monthly trip kilometres

    1,242 + 1,272 = 2,514 km

    Johan works out his deduction for the 2021–22 income year as:

    2,514 km × 72 cents = $1,810

    End of example

    Logbook method

    If you use the logbook method, your logbook needs to show your work-related trips for a minimum continuous period of 12 weeks. Under the logbook method:

    • Your claim is based on the work-related portion of your actual expenses for the car.
    • Expenses include running costs and decline in value but not capital costs, such as      
      • the purchase price of your car
      • the principal on any money borrowed to buy it
      • any improvement costs (for example, adding paint protection or tinted windows).
    • To work out your work-related use, you must have
      • a valid logbook
      • odometer readings for the start and end of the logbook period during the income year and for each income year you rely on your logbook (generally, you can rely on the logbook for 5 years).
    • You can claim fuel and oil costs based on either your      
      • actual receipts
      • estimate of your expenses using the odometer records that show readings from the start and the end of the period you had the car during the income year.
    • You need keep records for all other expenses for the car.

    You must retain your logbook and odometer records. Keep these records for five years after the end of the latest income year that you rely on them to support your claim.

    Keeping a logbook

    Your logbook must cover at a minimum 12 continuous weeks. If you started using your car for work-related purposes less than 12 weeks before the end of the year, you can extend the 12-week period into the next income year.

    Your logbook is valid for five years. However, if your circumstances change (for example, if you change jobs or move to a new house), and the logbook is no longer representative of your work-related use, you will need to complete a new 12-week logbook.

    If you are using the logbook method for two or more cars, keep a logbook for each car and make sure they cover the same period.

    You can keep an electronic logbook by using the myDeductions tool in the ATO app or keep a paper logbook.

    Your work-related percentage is worked out by:

    • calculating the total number of kilometres you travelled during the logbook period (a)
    • calculating the number of kilometres you travelled for allowable work-related trips during the logbook period (b)
    • dividing the amount at (b) by the amount (a) then multiply this figure by 100.

    Once you've calculated your work-related percentage, multiply it by your car expenses to calculate your claim.

    Damage to a third-party motor vehicle

    If you use your own motor vehicle in the course of your employment and you're involved in an accident that causes damage to another vehicle, you may be able to claim a deduction for:

    • the costs you incur to repair your vehicle
    • damages or compensation for the damage to the other vehicle if you are liable.

    If an accident occurs in the course of your employment, the expenses relating to your liability to pay for the damage to the other vehicle in the accident are costs you incur in earning your employment income. They are not capital, private or domestic.

    For more information on the meaning of incurred, see TR 97/7 Income tax: section 8-1 – meaning of 'incurred' – timing of deductions.

    Keeping car expense records

    The records you need to keep to work out your deduction for your car expenses depend if you use:

    Cents per kilometre method records

    If you use the cents per kilometre method, you don't need receipts. You do need to be able to show how you work out your business kilometres. For example, by recording work-related trips:

    • in a diary
    • in myDeductions in the ATO app.

    If you use the cents per kilometre method, your claim is based on a set rate for each business kilometre travelled. You can claim a maximum of 5,000 kilometres per car.

    Logbook method records

    If you use the logbook method, your claim must be based on the percentage of work use of your car. Your logbook is valid for 5 years, but you can start a new logbook at any time. If the work use of your car changes, you need to complete a new logbook.

    Your logbook must:

    • cover a minimum continuous period of 12 weeks and be broadly representative of your travel throughout the year
    • include the purpose of every journey, odometer reading at the start and end of each journey and total kilometres travelled during the period
    • include odometer readings at the start and end of each income year.

    Then, in each of the 4 years following the first year, you need to keep:

    • odometer readings for the start and end of the full period you claim
    • your work-related use percentage based on the logbook.
    Rules about keeping logbooks in different circumstances:

    Circumstance

    Rule

    First year of using logbook

    You must keep logbook records for at least 12 continuous weeks during this income year.

    Using the car for less than 12 weeks before the end of the income year

    You should continue to make records in the same logbook in the following income year so that your logbook covers the required 12 continuous weeks.

    Keeping logbooks for 2 or more cars

    The same rules apply for each car and you must keep the logbook for each car for the same 12 week period.

    You must also keep:

    • original receipts for all other expenses for the car
    • details of how you work out your claim for the decline in value of your car, including the effective life and method you use.

    Keep receipts or other documents that show:

    • fuel and oil expenses, or a reasonable estimate you base on odometer readings
    • other expenses for your car – for example, registration, insurance, lease payments, services, tyres, repairs, electricity expenses and interest charges.

    If your claim relates to the transport of bulky tools and equipment, you will need to keep a record of:

    • all work items you carry
    • the size and weight of all work items
    • evidence that the items you carry are essential to your work
    • evidence that your employer did not provide secure storage at the workplace.

    Actual expenses

    You can't claim your expenses using either method, if you borrow a car or use a vehicle other than a car. For example, a motorcycle or a vehicle with a carrying capacity one tonne or more, such as a utility truck or van.

    Instead, you can claim the work-related portion of the actual vehicle expenses you incur. You must keep:

    • evidence of how you calculated your work-related use of the vehicle
    • original receipts for all of your vehicle expenses
    • details of how you work out your claim for the decline in value of the vehicle, including the effective life and method you use.

    For fuel and oil expenses, you need to keep either:

    • actual receipts
    • odometer readings from the start and the end of the period in which you used the car during the income year and records of how you calculated the average price of fuel and the fuel consumption of your vehicle.

    Find out more about the format and types of records you need to keep.

    Last modified: 29 Jun 2022QC 31951