Work-related daily travel expenses you can claim
Travel expenses that you claim must directly relate to your work as an employee.
These expenses may include:
- work-related car expenses
- expenses for motorcycles and vehicles with a carrying capacity of one tonne or more, or nine or more passengers
- actual expenses - such as any petrol, oil and repair cost if you travel in a car that is owned or leased by someone else
- public transport - including taxi fares
- bridge and road tolls
- parking fees
- short-term car hire.
Generally, the cost of normal trips between your home and work is a private expense that you cannot claim an income tax deduction for. However, as an employee in the real estate industry, there are certain situations where you may be able to claim deductions for travel between your home and workplace.
Travelling between workplaces
Work-related car and travel expenses include the cost of travel:
- directly between two separate workplaces - for example, when you have a second job
- from your normal workplace to an alternative workplace while you are still on duty, and back to your normal workplace or directly home – see Example 2.
- from your home to an alternative workplace, and then to your normal workplace or directly home – see Example 3.
Note: Where your employer has offices in the city or town where you reside, your home office is not a place of business, even if your work requires you to work outside normal business hours.
Trevor is a real estate agent who travels from his normal workplace to his employer's head office to attend a meeting. After the meeting he travels directly back to his normal workplace and then home.
Trevor can claim the cost of each journey between his workplace and head office as a deduction as the trips are for work purposes.
Patricia is a property manager who looks after a large number of properties. Two mornings a week Patricia travels from home directly to different clients' properties to carry out rental inspections. She then travels to her normal workplace.
Patricia can claim a deduction for the travel between:
End of example
- home and different clients' properties
- one client's property and another
- clients' properties and her normal workplace.
Note: If you travel to and from a place of education because you are completing a work-related education course, you may be entitled to claim the travel costs as a self-education expense.
Transporting bulky tools and equipment
You can claim the cost of using your car or vehicle to travel between home and work if:
- you have to carry bulky tools and equipment you need to use for work
- it is essential to transport them to and from work and it is not done as a matter of convenience or personal choice
- there is no secure area for storing them at your workplace.
Sue is a real estate sales person who uses a laptop computer in the office and when she visits clients. She carries the computer to and from work in her car. As the computer is not considered bulky equipment she cannot claim a deduction for her travel costs to and from work based on transporting bulky tools and equipment.
End of example
How to claim your work-related daily travel 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.
Note: If you are doing your own income tax return, you claim your car expenses at D1 Work-related car expenses.
If you use a vehicle other than a car, such as a van with a carrying capacity of one tonne or more, you claim your actual expenses at D2 Work-related travel expenses on your income tax return.
Claiming car expenses
If the motor vehicle you drive is a car, and you are entitled to claim a deduction for your work-related car expenses, there are some changes to work-related care expense deductions from 1 July 2015. Below is a breakdown of the methods 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
- logbook method
Note: You can claim a deduction for the decline in value (depreciation) of your car up to the value of the car limit if you use the logbook method.
Before 1 July 2015 – four methods
There are four methods you can use to work out the amount you can claim.
The four methods are the:
- cents per kilometre method
- logbook method
- 12% of original value method
- one-third of actual expenses method.
Note: You can claim a deduction for the decline in value (depreciation) of your car up to the value of the car limit if you use either the logbook or the one-third of actual expenses method.
The following two methods are those most commonly used by real estate employees.
Cents per kilometre method
You can use this method to claim up to a maximum of 5,000 work kilometres per car even if you have travelled more than 5,000 work kilometres. For example, if you travelled 5,085 work kilometres, you can only claim the cost of travelling 5,000 kilometres with this method. You cannot claim for the extra 85 kilometres.
When working out your declaration using the cents per km 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.
Henry is a real estate salesperson. From his diary notes of appointments during the 2014 income year, Henry calculates that he has travelled 4,825 kilometres for work-related activities. Although he does not have an established pattern of travel, his diary notes form a reasonable basis for his calculation.
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.
To work out your deduction using the logbook method, you must keep:
- 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 and 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.
Remember, your car expenses do not include capital costs such as the purchase price of your car or the cost of improvements (not repairs) you make to it.
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 van, you can only claim your actual expenses.
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.
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.
Leasing and hire purchase payments
One of the big differences between commercial leasing and hire purchase is in the handling of tax deductions. With hire purchase, instead of claiming the whole monthly payment as a tax deduction as you do with a lease, you claim the depreciation of the motor vehicle and any interest charged.
Under a commercial hire purchase agreement you do not become owner of the motor vehicle until all monies owed under the arrangement are paid. However, you can still claim a tax deduction for the depreciation on the motor vehicle as well as the interest component of the loan repayments to the extent that the motor vehicle is used for work-related purposes. That is, interest on the loan payments and depreciation up to the car limit.
If you take out a car lease, the lender agrees to rent the vehicle to you for a set period for an agreed amount. If the vehicle is entirely for work purposes and not a luxury car, the lease payments are fully tax deductible but you cannot claim depreciation.
If the vehicle is a luxury car, you can claim a tax deduction for the finance component of the lease payments (interest) but not for the part of the lease payments that represent repayments of principal. You can also claim a deduction for depreciation subject to the car limit.
If you lease a car under a salary sacrifice novated lease arrangement, you cannot claim a deduction for the lease payments as these expenses are incurred by your employer. You also cannot claim depreciation.
Note: If you fill in your own tax return you claim these expenses at D2 Work-related travel expenses.