myTax 2025 Work-related car expenses

Things to know

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

To claim a deduction for a work-related expense:

• you must have spent the money yourself and weren't reimbursed
• it must be directly related to earning your income
• you must have a record to prove it (usually a receipt).

You can only claim a deduction for the work-related portion of an expense. You can't claim a deduction for any part of an expense that isn't directly related to earning your income or that is private.

If your total claim for all work-related expenses is more than $300, you must have written evidence to prove your claims.

You must choose to use either the cents per kilometre method or logbook method to work out your car expense deduction.

What you can claim

Car expenses include:

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

Expenses you incurred 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.

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

• Trips while working and between workplaces
• Home is a base of employment
• Transporting bulky tools and equipment
• Itinerant or shifting places of work

If the travel was 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.

If you received an award transport payment from your employer, you can claim a deduction for work-related car expenses these payments cover.

If you no longer own or use your car and you previously claimed a deduction for its decline in value, you may need to make a balancing adjustment.

Claim at this section any work-related car expenses incurred in earning assessable foreign employment income shown on an income statement or PAYG payment summary – foreign employment.

For more information, see:

• Taxation Ruling TR 2021/1 Income tax: when are deductions allowed for employee's 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.

Related pages

Claiming deductions
How to claim deductions for work-related expenses when lodging your tax return using myTax.

Records you need to keep
Records you need to show a payment or expense, the format to keep your records in, and how long to keep them.

What you can't claim

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

You can't claim a deduction for car expenses that:

• you pay for under a salary sacrifice or novated lease arrangement
• your employer reimburses you for.

Cars you use under a salary sacrifice or novated lease arrangement are usually on lease by your employer from a financing company. As you don't own or lease the car yourself under these arrangements, you won't be entitled to claim any deductions for using the car.

Don’t show at this section

You can't claim at this section 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 incurred on these vehicles at Work-related travel expenses.

Also, don't show the following at this section:

• Expenses you incurred in earning assessable foreign employment income not shown on an income statement or PAYG payment summary – foreign employment, go to Foreign employment.
• For any balancing adjustment, show your
  • losses at Other work-related expenses
  • profits at Other income.

Any balancing adjustment amounts calculated in the Depreciation and capital allowance tool will show automatically.

Calculation methods

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

• cents per kilometre method
• logbook method

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

Both methods require you to know or reasonably estimate your work-related kilometres. Work-related kilometres are the kilometres you travelled in the car in the course of earning assessable income.

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 worked out your work-related kilometres.

The cents per kilometre rate incorporates all expenses you incur for:

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

You can’t claim an additional deduction for any of your car expenses (including decline in value) if you choose to use the cents per kilometre method.

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 principle (money you borrowed) 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.

Your percentage of work-related use is worked out by:

• dividing the work-related kilometres by the total kilometres you travelled in this logbook period
• then multiplying this by 100.

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

There is no limit on the work-related kilometres per car per year that can be claimed under this method

You can claim fuel and oil costs based on either:

• your actual receipts
• 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.

For more information about the logbook method, including what to record in your logbook and the logbook timeframe, see Logbook method.

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
• owned the car or hired it under a hire-purchase agreement.

There is a limit on the cost you can use to work out the depreciation of a car. For more information, see car limit.

If you leased a luxury car, see Leased luxury cars.

Remember:

• the car starts to decline in value from the day you first use it, even if you don't begin using it for work until a later time
• you can claim a deduction only for the period in the year in which you used the car for work
• you must apportion your deduction to reflect the
  • period you owned the car
  • percentage that the asset was used for work purposes.
• you must have directly incurred the cost of the asset and it wasn't reimbursed.

For more information, see Guide to depreciating assets.

Completing this section

You'll need to know or reasonably estimate your work-related kilometres. Work-related kilometres are the kilometres you travelled 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 bought
  • date you bought 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 worked out your claim – for example, calendar or diary entries or work trip details in a record keeping app.

We pre-fill your tax return with work-related car expense information you uploaded from myDeductions. Check them and add any work-related car expenses that haven't pre-filled.

To claim work-related car expenses, you must first show income from salary and wages or foreign employment income in the Income statements and payment summaries section.

To personalise your tax return to show work-related car expenses, at Personalise return select:

• You had deductions you want to claim
• Work-related expenses

To claim your work-related car expenses, at Prepare return select 'Add/Edit' at the Deductions banner.

At the Work-related car expenses banner:

1. For each work-related car that hasn't pre-filled in your tax return, select Add.
2. Enter the description of the car (for example, registration, make or model).
3. Select the Calculation method you wish to use.
   If you qualify to use both methods, you can use the method that gives you the largest deduction or is most convenient. You can enter each in myTax to work this out. If you do, remember to delete the one you don't want to use.
4. If you select the 'Cents per kilometre' method, enter the number of work-related kilometres you travelled. Go to step 6.
5. If you select the 'Logbook' method enter the information into the corresponding fields. MyTax will calculate the total expenses.
   • If you have calculated the decline in value of your car, enter the amount without any reduction for personal use. myTax will multiply the decline in value you enter by the percentage of work-related use.
   • The Depreciation and capital allowances tool can help you to work out any decline in value deduction. It can also work out any deductible balancing adjustment when you stop holding a depreciating asset. Access this tool when you add your work-related car expenses and select the 'Logbook' method.
     If you used this tool, the calculated decline in value amount will automatically exclude the personal use percentage. To display results from the tool you must select the logbook method.
     Fields from this tool can't be adjusted in myTax. To make any adjustments, or to add new assets to the tool, select the 'Use the depreciation and capital allowances tool' link.
6. Select Save.
7. Select Save and continue when you have completed the Deductions section.

Watch: The following video shows you how to use the Depreciation and capital allowances tool.

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

Our myDeductions tool is free to use and is available through the ATO app. The tool makes it easier and more convenient to keep records of your expenses and income in one place, including photos of your receipts and invoices.

Leased luxury cars

If you leased a luxury car and wish to claim a deduction at this section, this 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. For more information, see car limit.