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  • Car expenses

    If you use your own car in performing your work-related duties (including a car you lease or hire), you may be able to claim a deduction for car expenses.

    If the travel was partly private, you can claim only the work-related portion.

    This information relates to car expenses only. A car is defined as a motor vehicle (excluding motor cycles and similar vehicles) designed to carry a load less than one tonne and less than nine passengers. Many four-wheel drive vehicles are included in this definition.

    For a summary of this content in poster format, see Car expenses (PDF, 548KB)This link will download a file.

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    When you can and can't claim car expenses

    When you can claim

    You can claim a deduction for work-related car expenses if you use your own car in the course of performing your job as an employee – for example, to:

    • carry bulky tools or equipment (such as an extension ladder or cello) that your employer requires you to use for work and there is no secure storage available at work
    • attend work-related conferences or meetings away from your normal workplace
    • deliver items or collect supplies
    • travel between two separate places of employment, but not if one of the places is your home (for example, when you have a second job)
    • travel from your normal workplace to an alternative workplace (that isn't a regular workplace) and back to your normal workplace or directly home
    • travel from your normal workplace or your home to an alternative workplace that is not a regular workplace – for example, a client’s premises
    • perform itinerant work.

    If you receive an allowance from your employer for car expenses, it is assessable income and the allowance must be included on your tax return. The amount of the allowance is usually shown on your income statement or payment summary.

    Using someone else's car or other vehicle

    If you use someone else's car or other vehicle (that is not defined as a car) for work purposes, you may be able to claim the direct costs (such as fuel) as a travel expense.

    Other vehicles include:

    • motorcycles
    • vehicles with a carrying capacity of  
      • one tonne or more, such as a ute, truck or panel van
      • nine passengers or more, such as a minivan.

    When working out your claim, you need to use the actual costs of your motor vehicle expenses. You need to keep receipts for the actual costs you incur such as fuel and oil. You can use a logbook or diary to separate private use from work-related trips. You can use the myDeductions tool to help keep your records.

    See also:

    When you can't claim

    Generally, you can't claim the cost of travel between home and work because this travel is private.

    You can't claim a deduction for car expenses that have been salary sacrificed or where you have been reimbursed for these expenses.

    For motorcycles and other vehicles (that are not cars), you can't claim work-related deductions under car expenses. However, you may be able to claim for work-related deductions under travel expenses (see Other travel expenses). You can only claim your actual expenses for these vehicles. You must use the logbook method to show your work-related use.

    Calculating your deductions

    You can choose one of the following two methods to calculate deductions for car expenses:

    If you are claiming car expenses for more than one car, you can use different methods for different cars. You can also switch between the two methods for different income years for the same car.

    The myDeductions tool can help you keep records of your car use for both of the calculation methods. There are three options for recording your car trips in myDeductions, including:

    • a point to point trip
    • a GPS trip
    • an odometer trip.

    If you're using the logbook method, you can create a valid logbook record using myDeductions.

    Cents per kilometre method

    Under the cents per kilometre method:

    • A single rate is used. The rate is:
      • 72 cents per kilometre from 1 July 2020
      • 68 cents per kilometre for 2018–19 and 2019–20
      • 66 cents per kilometre for the 2017–18, 2016–17 and 2015–16.
    • You can claim a maximum of 5,000 business kilometres per car.
    • You may need to provide written evidence to show how you worked out your business kilometres (for example, by producing diary records of work-related trips).
    • Where you and another joint owner use the car for separate income-producing purposes, you can each claim up to a maximum of 5,000 business kilometres.

    Logbook method

    Under the logbook method:

    • Your claim is based on the business-use percentage of the expenses for the car.
    • Expenses include running costs and decline in value but not capital costs, such as  
      • the purchase price of your car
      • the principal on any money borrowed to buy it
      • any improvement costs.
    • To work out your business-use percentage, you need a logbook and the odometer readings for the logbook period. The logbook period is a minimum continuous period of 12 weeks.
    • You can claim fuel and oil costs based on either your  
      • actual receipts
      • estimate of the expenses based on odometer records that show readings from the start and the end of the period you had the car during the year.
    • You need written evidence for all other expenses for the car.

    See also:

    Owned or leased cars

    You can claim a deduction for using a car that you owned, leased or hired under a hire-purchase agreement using either the:

    You can't claim 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.

    See also:

    Damage to a third-party motor vehicle

    If you use your own motor vehicle in the course of your employment and you are involved in an accident that causes damage to another vehicle, you may be able to claim a deduction for the costs you incurred.

    If you are liable for the damages or compensation for the damage to the other vehicle, you may be able to claim a deduction for the costs you incurred.

    If an accident occurs in the course of your employment, the expenses relating to your liability to pay for the damage to the other vehicle in the accident are incidental and relevant to you earning your assessable income. They are not capital, private or domestic.

    See also:

    Last modified: 22 Jul 2020QC 31951