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Claiming a tax deduction for motor vehicle expenses

As a business owner, you can claim a tax deduction for expenses for motor vehicles used in running your business.

Last updated 19 June 2024


Media: Claiming deductions – Motor vehicle expenses Link (Duration: 01:18)

For a summary of this content in poster format, see Motor vehicle expenses (PDF, 761KB)This link will download a file.

Types of vehicles

Cars (for income tax purposes) are defined as motor vehicles (including 4-wheel drives) designed to carry both:

  • a load less than one tonne
  • fewer than 9 passengers.

Other vehicles include:

  • motorcycles
  • vehicles designed to carry either
    • one tonne or more (such as a utility truck or panel van)
    • 9 passengers or more (such as a minivan).

The motor vehicle must be owned, leased or under a hire-purchase agreement.

If you operate your business as a company or trust, you can also claim for motor vehicles provided to an employee or their associate as part of their employment.

Expenses you can claim

You can claim:

  • fuel and oil
  • repairs and servicing
  • interest on a motor vehicle loan
  • lease payments
  • insurance cover premiums
  • registration
  • depreciation (decline in value).

Make sure you use the correct calculation method when claiming motor vehicle expenses. Using the wrong method can lead to incorrect claims. For more information, see Calculation methods for claiming business motor vehicle expenses.

Separate private from business use

If you use a motor vehicle for both business and private use, you must be able to correctly identify and justify the percentage that you are claiming as business use. The percentage that is for private use isn't claimable and fringe benefits tax may apply (see Cars and FBT). This is an area where we often see errors made.

It is important to keep records. You can use a logbook or diary to record private versus business travel. For more information, see Motor vehicle expense records you need to keep.

Travelling between your home and your place of business is considered private use, unless you are a home-based business and your trip was for business purposes. For more information, see Motor vehicle expenses for a home-based business.

You can also refer to Motor vehicles used by shareholders of private companies.

Car limit

There is a limit on the cost you can use to work out the depreciation of passenger vehicles (except motorcycles or similar vehicles) designed to carry a load of less than one tonne and fewer than 9 passengers.

Work out how to claim motor vehicle expenses, depending on your business structure and the type of vehicle.

Check how sole traders and some partnerships can use the cents per kilometre method for car-related business expenses.

Sole traders and some partnerships can use the logbook method when claiming expenses for a car.

The actual cost method may be the only method you can use to claim your business's motor vehicle expenses.

Information on motor vehicle expenses for a home-based business.

How to claim expenses when your employees use a vehicle as part of running the business.

Information for private companies providing vehicles to a shareholder or their associate (not as an employee).

The records you need to keep for your business's motor vehicle expenses depend on how you calculate your claim.