D1 Work-related car expenses 2025

Things you need to know

To claim a deduction for work-related car expenses as an employee, you must incur the expenses in the course of your employment duties.

Car expenses include:

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

Expenses you incur must relate to a car you own, lease or hire under a hire-purchase agreement. You don't need to be the registered owner, however you must be able to show there is a private arrangement that made you the owner or lessee of the car. See, Expenses for a car you own or lease.

Expenses you incur must also relate to work-related trips, such as travelling between workplaces. In very limited circumstances, where eligible, you can claim expenses you incur for trips between home and work, see:

• Home is a base of employment.
• Transporting bulky tools and equipment.
• Itinerant or shifting places of work.

You can't claim a deduction for expenses you incur for normal trips between your home and regular place of work.

If the travel is partly private, you can claim only the part that relates to travel for a work purpose. For more information, see Trips you can and can't claim.

To calculate your deduction there are 2 methods, you must choose either:

• Cents per kilometre method
  • Claim a rate of 88c per kilometre for 2024–25 up to a maximum of 5,000 work-related kilometres.
• Logbook method – you can claim the work-related use percentage (using records from your logbook) of your all your car expenses.

You can use the method that gives you the largest deduction or is most convenient if you have appropriate records to support your claim.

If you receive an award transport payment under an industrial law or award in force on 29 October 1986, see Award transport payments.

If you receive assessable income from your work as an employee outside Australia, that is

• on a PAYG payment summary – foreign employment, you must claim work-related car expenses you incur in earning that income at this question.
• not on a PAYG payment summary – foreign employment, you claim your deductions at question 20 Foreign source income and foreign assets or property.

For more information, see:

• Taxation Ruling TR 2021/1 Income tax: when are deductions allowed for employees' transport expenses?
• Taxation Ruling TR 95/34 Income tax: employees carrying out itinerant work – deductions, allowances and reimbursements for transport expenses
• Practice Statement Law Administration PS LA 1999/2 Calculating joint car expense deductions.

What you can't claim at this question

You can't claim at this question any expenses relating to:

• expenses for a vehicle that isn't yours or isn't a car, such as
  • a motorcycle
  • vehicles with a carrying capacity of one tonne or more, or 9 or more passengers, such as utility trucks and minibuses.

However, you can claim the actual work-related costs you incur on these vehicles in your tax return, at D2 Work-related travel expenses 2025.

What you need to answer this question

You'll need to know or reasonably estimate your work-related kilometres. Work-related kilometres are those you travel in the car in the course of earning assessable income.

You may need:

• written evidence for your car expenses, such as receipts or invoices – this evidence must show the
  • name or business name of the supplier
  • amount of the expense or cost of the asset
  • nature of the goods or services you buy
  • date you buy the goods or services
  • date the document was produced
• your car logbook and odometer records
• a record that shows how the expenses relate to earning your income and how you work out your claim – for example, calendar or diary entries or work trip details in a record keeping app.

For more information, see Calculating your car expense deductions and keeping records.

You need to keep records for 5 years (in most cases) from the date you lodge your tax return.

Deductions for decline in value (depreciation)

You can claim a deduction for the decline in value of the car, only if you:

• use the logbook method
• own the car or hire it under a hire-purchase agreement.

If you lease a luxury car, for more information see Special circumstances 2025.

The cents per kilometre rate covers all your car expenses, including decline in value. You can't claim an additional deduction for any of your car expenses if you choose to use the cents per kilometre method.

If you're claiming a deduction for the decline in value of a car, see Guide to depreciating assets 2025.

Sold, disposed of, stolen or destroyed cars

You might need to make a balancing adjustment if you claim deductions for your car, and during 2024–25 either:

• you sold or otherwise dispose of your car
• your car was stolen or destroyed.

To work out the balancing adjustment, see Guide to depreciating assets 2025 – balancing adjustment rules for cars.

If you had a loss after making the adjustment, include your deduction for it at question D5. If you had a profit after making your adjustment, include it at question 24 in your supplementary tax return.

Switching between methods

You also make a balancing adjustment if, at a time before you disposed of the car, you switch between the 'cents per kilometre' and 'logbook' methods to claim your car expenses.

To work out the amount of the balancing adjustment, see Guide to depreciating assets 2025 – balancing adjustment rules for cars.

Completing your tax return

How you complete this question depends on the method you choose to use to work out your car expenses deduction, either:

• Cents per kilometre method
• Logbook method.

If you have more than one car and you're claiming expenses under both methods, add the amounts you work out under each method and write the total at question D1 in your tax return.

Print the code letter for the method that gave you the largest amount in the Claim type box beside the amount.

Cents per kilometre method

For 2024–25, the cents per kilometre method:

• allows you to claim a set rate for each work-related kilometre – 88 cents per kilometre for all cars.
• applies for a maximum of 5,000 work-related kilometres per car, per year.

You don't need written evidence, but you need a record that shows how you work out your work-related kilometres. See, Calculating your car expense deductions and keeping records

Follow the steps to calculate your deduction using the cents per kilometre method.

Step 1

Multiply the total work-related kilometres you travel during 2024–25 (maximum of 5,000 km per car) by $0.88 (the cents per kilometre rate).

For example:

3,250 kms × $0.88 = $2,860

Step 2

If you're claiming for more than one car using this method, repeat the step 1 and add up all the amounts.

Step 3

Write the total at question D1 – label A. Print the code letter S in the Claim type box beside the amount.

Logbook method

For 2024–25, using the logbook method you claim the percentage of the expenses for the car that are work-related. Your expenses:

• include
  • running costs such as fuel, maintenance and repairs
  • interest or lease expenses
  • deductions for decline in value (depreciation)
• don't include:
  • capital costs, such as the purchase price of your car
  • the principal (money you borrow) to buy it
  • any improvement costs.

To work out your percentage of work-related use, you need a logbook where you record your work-related trips for a continuous period of 12 weeks and the odometer readings for the logbook period. You also need the start and end of the period you had the car during each income year you're relying on the logbook.

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

You can claim fuel and oil costs based on either your actual receipts or you can make a reasonable estimate of the expenses using your odometer records that show readings from the start and the end of the period you had the car during the income year.

You need written evidence (such as receipts) for all other expenses for the car. See, Calculating your car expense deductions and keeping records.

Follow the steps to calculate your deduction using the logbook method.

Step 1

Work out the total kilometres you travel during the logbook period and how many of these are work-related kilometres.

Divide the work-related kilometres by the total kilometres you travel in this period, then multiply this by 100. This is your work-related use percentage.

For example:

4,100 work-related kilometres ÷ 6,500 total kilometres = 0.630.63 × 100 = 63%

Step 2

Add up your total expenses. To work out the amount to include for decline in value, see Deductions for decline in value (depreciation).

Step 3

Multiply the amount at step 2 by your work-related use percentage from step 1 (or if the pattern of use of the car has changed then use the reasonable estimate you made).

Step 4

Write the amount at question D1 – label A. Print the code letter B in the Claim type box beside the amount.

Where to go next

• Go to question D2 Work-related travel expenses 2025.
• Return to main menu Individual tax return instructions 2025.
• Go back to question Total income or loss 2025.