Motor vehicle expenses
How you work out your claims and what records you need to keep will depend on whether the motor vehicle you use is considered to be a car, and whether you own or lease it.
Working out if your vehicle is a car
Your vehicle is considered not to be a car if it is any of the following:
- a vehicle with a carrying capacity of one tonne or more, such as a utility truck or panel van
- a vehicle with a carrying capacity of nine passengers or more, such as a minivan
- a motorcycle.
To determine whether your vehicle has a load carrying capacity of one tonne or more you will need to refer to the manufacturer's handbook for your vehicle. The load carrying capacity of your vehicle is the difference between the gross vehicle mass and the kerb weight.
Loc owns a vehicle with a gross vehicle mass of 2,402 kg and a kerb weight of 1,040 kg – so, the payload, or carrying capacity weight, of Loc's vehicle is:
2,402 kg – 1040 kg = 1,362 kg
Because the vehicle's payload, or carrying capacity, is greater than 1,000 kg (or one tonne) Loc's motor vehicle is considered to be a 'vehicle other than a car'.
As a result, Loc cannot claim using one of the two car expense methods. However, Loc may claim actual vehicle expenses to the extent that the vehicle is used for work purposes.
End of example
Claiming car expenses
If you are entitled to claim a deduction for your work-related car expenses, there are two methods you can choose from to work out the amount you can claim.
The two methods are the:
- cents per kilometre method
- logbook method
Your car expenses do not include capital costs, such as the purchase price of your car or the cost of improvements you make to it.
Cents per kilometre method
You can use this method to claim up to a maximum of 5,000 work kilometres, even if you have travelled more than 5,000 work kilometres – for example, even if you have travelled 5,085 work kilometres, you cannot claim for the extra 85 kilometres.
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 how you worked out your estimate of work kilometres – for example, by:
- using a diary of work-related travel
- basing your costs on a regular pattern of travel.
Reuben travels five kilometres each day while carrying out work-related activities. He worked Monday to Friday for 48 weeks during the 2016 income year. It would be reasonable for Reuben to calculate his work kilometres in the following way:
5 (km) x 5 (days) x 48 (weeks) = 1,200 work kilometres for the 2016 income year.
End of example
The logbook method provides a way of working out the percentage of your car use that is for work purposes. You can then claim a deduction for this percentage of each car expense you incur.
When using the logbook method, you must keep all of the following:
A logbook – to work out the percentage of your car use that was for work purposes, your logbook must cover a period of 12 continuous weeks; the logbook is valid for five years.
Odometer records – record your opening and closing odometer readings for each year you use the logbook method.
Written evidence for all your car expenses – you can use your odometer records to estimate your fuel and oil costs, instead of keeping receipts.
You can claim a deduction for the decline in value (depreciation) of your car up to the value of the luxury car limit if you use either the logbook method.
Claiming expenses for vehicles other than cars
If you are eligible to claim your vehicle expenses, and your vehicle has a carrying capacity of one tonne or more, such as a panel van or utility truck, you can only claim your actual expenses.
Your actual expenses include the cost of:
- fuel and oil
- repairs and servicing
- interest on a car loan
- lease payments
If you use your vehicle for both work and private purposes, you can use a diary to show how much of your expenses relate to each. Remember to keep receipts for your actual expenses – this includes for fuel and oil costs. Bank statements and credit card transaction receipts are not sufficient evidence for fuel and oil purchases – you need to keep your actual receipts.
A deduction is allowable for parking fees (but not fines) and tolls if the expenses are incurred while you are travelling:
- between two separate places of work
- to a place of education for work-related self-education purposes (if the self-education expenses are deductible)
- in the normal course of duty and the travelling expenses are allowable deductions – see Work-related daily travel expenses you can claim.
Otherwise, the cost of that travel is a private expense and the parking fees and tolls are not claimable.
Other daily travel expenses
You will need to keep records for other daily travel expenses, such as:
- car parking
- bridge and road tolls
- taxi and bus fares.
Work-related daily travel expenses you cannot claim
Unless you meet the conditions of Work-related daily travel expenses you can claim, generally you cannot claim a deduction for normal trips between work and home, even if:
- you worked outside normal business hours – for example, shift work or overtime
- you are on call
- you do minor tasks on the way to work or home, such as picking up mail
- you live a long distance from work
- there is no public transport available, so you used a car.
You cannot claim a deduction for any fines received, such as speeding or parking infringements.