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Last updated 27 June 2018

Owned or leased cars

You can claim at this section your work-related expenses for using a car that you owned, leased or hired (under a hire-purchase agreement).

You cannot claim at this section any expenses relating to motorcycles and vehicles with a carrying capacity of one tonne or more, or nine or more passengers, such as a utility truck and panel van. See Work-related travel expenses.

You cannot claim at this section any expenses relating to a car owned or leased by someone else, including your employer or another member of your family. However, we consider you to be the owner or lessee of a car and eligible to claim expenses where a family or private arrangement made you the owner or lessee even though you were not the registered owner. For example, you can claim for a car that was given to you by another member of your family and which, although it was not registered in your name, you used as your own and for which you paid all expenses.

If you owned or leased a car or hired one under a hire-purchase agreement, you can use either of the methods explained in this section to claim your work-related car expenses.

Leased luxury cars

If you leased a luxury car and wish to claim a deduction at this section, the following information about luxury cars will help you.

A leased luxury car is a leased car that at the time the lease began had a market value of more than the 'car limit' that applied in the relevant income year.

You can claim a deduction for the decline in value of a leased luxury car (but not for other leased cars). The car can be new or second-hand. You must use the logbook method.

When claiming a deduction for decline in value, the initial value that you use for the car is the limit that applied in the income year in which the lease began.

Car limits for the past 10 years























If your car was sold, disposed of, stolen or destroyed

If you have been claiming deductions for your car and, during the income year, you sold or disposed of it, or it was stolen or destroyed, you might need to make a balancing adjustment. You do not need to make a balancing adjustment if you used only the 'cents per kilometre' method for calculating expenses for your car. You will need to make a balancing adjustment if you have used the '12% of original value' method to claim your car expenses in a previous income year.

To work out the balancing adjustment, you can use the Depreciation and capital allowances tool or see Guide to depreciating assets.

If you had a loss after making the adjustment, include your deduction for it at Other work-related expenses. If you had a profit after making your adjustment, include it at Other income on your tax return. If you used the Depreciation and capital allowances tool, the amount will automatically be shown at these sections.

You also make a balancing adjustment if you switched between methods to claim your car expenses. To work out the amount of the balancing adjustment in this situation, contact us or your recognised tax adviser.

If you received an award transport payment, see Claiming a deduction for car expenses - award transport payments.

Expenses relating to foreign employment income

If you received assessable income from your work as an employee outside Australia that is shown on a PAYG payment summary - foreign employment, you must claim any work-related car expenses you incurred in earning that income at this section.

If you received assessable foreign employment income that is not shown on a PAYG payment summary - foreign employment, you claim your deductions against that income at the Foreign income, assets and entities section and select Foreign employment.

Record keeping

Keep written evidence of your car expenses, where required. If you are using the logbook method, you must record your odometer readings for the start and end of the period being claimed. Keep this evidence for five years from the due date for lodging your tax return. If you lodge your tax return after the due date, the five years start from the date you actually lodge it. If at the end of this period you are in a dispute with us that relates to this work expense, you must keep your records until the dispute is resolved.

Further information

See also: