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Expenses for a car you own or lease

Deductions for work-related use of your own car.

Last updated 21 June 2023

Claiming a deduction for car expenses

To claim a deduction for car expenses:

  • Your vehicle must meet the definition of a car.
  • You must own or lease the car.
    • You do not own or lease the car if you use it under a salary sacrifice or novated lease arrangement.
  • The expenses must be for work-related trips.
    • You can claim for trips between workplaces or to perform your work duties.
    • You can't claim for trips between your home and place of work, except in limited circumstances.
  • You must have spent the money yourself and weren't reimbursed.
  • You must have the required records.

If it's someone else's car or it's another type of vehicle (such as a truck or motorcycle), see Expenses for a vehicle that isn't yours or isn't a car.

If your travel is partly private, you can only claim a deduction for the work-related portion of your expenses.

You claim the tax deduction in your income tax return as a work-related car expense.

If you receive an allowance from your employer for car expenses, you must include it as assessable income in your tax return. The allowance amount is shown on your income statement or payment summary.

Definition of a car

To claim a work-related car expense, the vehicle must be a car.

A car is a motor vehicle that carries a load of less than 1 tonne and fewer than 9 passengers (including the driver). Motorcycles and similar vehicles are not cars.

If the vehicle does not meet this definition, you claim your work-related expenses using the approach for a vehicle that isn't a car.

You must own or lease the car

To claim car expenses you must own or lease the car, or hire it under a hire-purchase arrangement.

You can't claim running costs for a car you use under a salary sacrifice or novated lease arrangement. In this situation the car is usually leased by your employer from a financing company, and your employer typically pays for the running costs and claims deductions. You can claim additional expenses, like parking and tolls associated with your work use of the car.

If you use a car owned by a family member, and you can show there is a private arrangement that made you the owner or lessee of the car (even if you aren't the registered owner), you work out your car expenses as though it is your car.

If you don't own or lease the car (or don't have a private arrangement that makes you the owner or lessee), you claim your work-related expenses using the approach for a vehicle that isn't yours.

Example: private arrangement

When Rory turned 18 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. However, the registration has not been updated and the car is still registered 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

Calculating your car expense deductions and keeping records

You use either of 2 methods to calculate deductions for car expenses:

Use the calculator to work out your deduction for either method.

Work-related car expenses calculator

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

Cents per kilometre method

To calculate your deduction using this method, multiply the number of work-related kilometres you travel in the car by the rate per kilometre for that income year.

'Work-related kilometres' are the kilometres your car travels in the course of earning your assessable income.

  • Use the rate for the income year for which you are claiming a deduction:
    • 2023–24: use 85 cents per kilometre
    • 2022–23: use 78 cents per kilometre
    • 2020–21 and 2021–22: use 72 cents per kilometre
    • for rates in earlier years, see Prior year tax return forms and schedules.
  • You can claim a maximum of 5,000 work-related kilometres per car.
  • You need to keep records that show how you work out your work-related kilometres.

If you and another joint owner use the car for separate income-producing purposes, you can each claim up to 5,000 work-related kilometres.

The cents per kilometre rate covers all car expenses, including:

  • 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 27-kilometre round trip in his own car from his head office in the city to meet with clients. In addition, once per month he makes a 106-kilometre round trip to visit clients at another location.

When Johan consults his diary at the end of the 2022–23 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 5 weeks during the income year, he still made 12 × 106-kilometre round trips to visit clients.

He works out his work-related kilometres as:

Number of weekly trips × distance of weekly trip = total weekly trip kilometres

46 × 27 km = 1,242 km

Number of monthly trips × distance of monthly trip = total monthly trip kilometres

12 × 106 km = 1,272 km

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

1,242 + 1,272 km = 2,514 km

Johan works out his deduction for the 2022–23 income year as:

2,514 km × 0.78 = $1,961

End of example

Keeping records for cents per kilometre method

If you use the cents per kilometre method, you don't need receipts.

You do need to be able to show that you own the car and how you work out your work-related kilometres. For example, you could record your work-related trips:

Logbook method

To calculate your deduction using the logbook method, you need to:

Keeping a logbook

Your logbook must:

  • cover at least 12 continuous weeks and be broadly representative of your travel
  • include the destination and purpose of every journey, the odometer reading at the start and end of each journey, and the total kilometres travelled during the period
  • include odometer readings for the start and end of the logbook period.

Your logbook is valid for 5 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.

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.

If you are using the logbook method for 2 or more cars, keep a logbook for each car and make sure they cover the same period.

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

You must retain your logbook and odometer records for 5 years after the end of the latest income year that you rely on them to support your claim.

Keeping records of car expenses for logbook method

You can claim running costs and decline in value of your car.

You must keep:

  • receipts for your fuel and oil expenses, or a record of your reasonable estimate of these expenses based on the odometer readings for the start and end of the period for which you are claiming
  • receipts for other expenses for your car – for example, registration, insurance, lease payments, services, tyres, repairs, electricity expenses and interest charges
  • a record of the purchase price of the car and how you work out your claim for the decline in value of your car, including the effective life and method you use.

You can't claim capital costs, such as the purchase price of your car, the principal on any money borrowed to buy it, or improvement costs (for example, adding paint protection or tinted windows).

How to calculate your deduction using a logbook

  1. Work out the total number of kilometres you travelled during the logbook period.
  2. Work out the number of kilometres you travelled for allowable work-related trips during the logbook period.
  3. Divide the work-related kilometres (2) by the total kilometres (1), then multiply by 100. This is your work-related use percentage.
  4. Add up your total expenses for the period for which you are claiming.
  5. Multiply your work-related use percentage (3) by your car expenses (4). This is the amount you claim as a deduction.